Housing associations to warn rising costs a threat to delivery of social housing

The organisation that represents Approved Housing Bodies (AHBs), whose members supply nearly half of new social housing, will warn the Oireachtas housing committee on Tuesday that rising construction costs threaten the delivery of social housing schemes in the future.

The committee is conducting hearings on inflation in the construction industry and witnesses from the Irish Council for Social Housing are scheduled to address it.

In an opening statement from council president Pat Doyle, who is also chief executive of the Peter McVerry Trust, the group will warn that construction inflation, allied to rising interest rates for loan finance, is a source of growing worry.

The council represents 270 housing associations that own and manage some 50,000 homes, which it says cater for “for general needs family housing as well as specialist housing and supports for homeless households, disabled people, older people and other groups such as refugees”.

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In addition, it says, Approved Housing Bodies have delivered more than 40 per cent of all new social housing in recent years. Some of its members are also involved in the provision of cost-rental housing.

Mr Doyle will warn TDs that rising interest rates are threatening the funding model of some schemes because of the increased cost of borrowing.

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The cost of land remains a significant barrier, his opening statement will note. “Provision and assembly of land is still a central underlying factor for AHBs being able to meet the Housing for All targets of 40-50 per cent of total social housing delivery as well the cost rental programme and more work should be undertaken in this area,” it says.

The committee will also be told that the approved housing bodies are seeing smaller builders, with whom many AHBs partner to deliver small housing schemes, being especially squeezed.

“Cash flow problems are more commonly reported and some of the contractors operating at this scale are feeling vulnerable where they had bought sites previously for social and affordable housing. Now their funders may be unwilling to fund these small builders if costs cannot be controlled,” Mr Doyle will say.

However, given the power of the State in the construction sector now, because of increased investment in social and affordable housing, there should be “greater opportunities to influence pricing”, the committee will be told.

In addition, the council says that “modern methods of construction”, including modular housing, have led to improvements in the speed of delivery in a small number of cases.