Top finance official raises risks to public finances from surge in housing body deals

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Department-Of-Finance,Department-Of-Housing-Local-Government-And-Heritag,Fianna-Fail

Approved Housing Bodies had €7bn of borrowings at the end of last year on €8.3bn of housing stock

The Department of Finance has concerns about mounting risks to taxpayers as approved housing bodies and the Land Development Agency forward fund apartment and house construction deals. Photograph: Chris Ratcliffe/BloombergDepartment of Finance secretary general John Hogan said in a letter on April 30th that there has been a “fundamental shift in risk appetite” by AHBs — and, by proxy, the State — in forward funding the development of apartments and houses “at an increased scale”.

He said there needs to be sufficient checks and balances. “Any evidence of rapid balance sheet growth, driven by the funding the development stage of delivery, should be closely monitored,” he said, adding that it was important that State funding of development does not replace private capital that might otherwise be deployed.

The LDA, which has received €6.25 billion of State capital commitments, was set up in 2018 to develop affordable and social homes on public land. It has since expanded to work with builders to deliver homes on private land. He highlighted various checks and balances in the system, including: the AHB Regulatory Authority’s oversight of housing bodies; the HFA; work by the so-called AHB strategic forum to monitor “increased financial risk involved in lending to the sector”; and plans for increased Government oversight of LDA capital commitments.

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