The Government is likely to introduce a new mechanism for funding the provision of social housing in next week’s Budget.
RTÉ News has learned that officials have examined the options for setting up a "funding aggregator" - an off-balance sheet vehicle that could raise money at the lowest possible interest rates, and pass it on to the social housing sector to build or renovate housing units.
Using a special purpose vehicle structure would mean the borrowing would not count as Government debt.
The Special Purpose Vehicle would probably be located in the new Strategic Banking Corporation of Ireland, a recently established state development bank.
Today Minister for the Environment Alan Kelly said a comprehensive social housing strategy will be announced immediately after the Budget to reflect that it is now a number one priority for the Government.
Mr Kelly said the strategy will deliver thousands of homes over the next five to seven years, and it will be funded by a mixture of direct Government investment and private funding.
Under the new mechanism expected in next week's Budget, the new entity could borrow money from, among others, the European Investment Bank, Pension Funds, Credit Unions, the Ireland Strategic Investment Fund (the former National Pension Reserve Fund).
It could also seek finance from international banks, such as Goldman Sachs, which funds social housing provision in other countries.
The aggregator could also be used to channel funding from EU structural funds to local authorities, which have existing plans to retrofit insulation into some 2,000 currently unused housing units.
Sourcing finance to build or buy housing units has been a serious difficulty for social housing providers such as housing associations.
There are almost 300 such organisations, mostly voluntary in nature, which manage and maintain some 27,000 social housing units.
Lacking the scale to negotiate the lowest sources of funding has left the sector at a disadvantage.
An aggregator could source funding at low cost from a variety of sources and become a one stop shop for supplying finance to the social housing sector.
Addressing a conference in Limerick, organised by the Irish Council for Social Housing, which is looking at new ways to fund voluntary housing agencies, Minister Kelly saidthe privatisation of social housing should never have happened.
A new and comprehensive social housing strategy is necessary and in the restructuring of Government priorities social housing is number one, he added.
Mr Kelly said that will be reflected in the Budget, which will be announced on Tuesday.
Chief Executive Donal McManus said it could provide 5,000 social housing properties over the next three years, if a more flexible approach was taken by the Government and the banks to funding voluntary agencies.
It has called for a social finance solidarity bond to be established to provide low-cost loans over long time periods to housing agencies, similar to those operating in the UK and in France.
He said that one of the greatest challenges is convincing the banks that investing in housing agencies is a safe, long-term and low-risk investment and is not speculative, and this in particular should be reflected in the Government's new social housing strategy.
