In Ireland social housing gets a boost with financing from the European Investment Bank, the EU bank, and transforms the lives of people priced out of the rental market

For 31 years, Johnny and Ann Lyster lived in tiny, overpriced, scandalously dilapidated bedsit apartments. Johnny’s earnings—first as a bus driver and then on disability—were too low to rent a better apartment in Dublin’s overheated property market, and the Lysters were one of 72,000 households waiting to be allocated social housing. In one rotten apartment, Johnny cleaned the damp off the walls, only for mold to enter his lungs, causing asthma attacks that made him black out.

Then relief came. Anne noticed construction of some social housing was nearing completion across from the college where she was taking a computer course. Johnny was able to get an interview with Clúid Housing, which was building the new homes. In October 2017, the couple moved into a two-bedroom apartment in Cabra West, a working-class Dublin neighbourhood. Out on his balcony where he grows potatoes and strawberries, Johnny now feels “like I’m on a summer holiday in Lanzarote. It’s like living in a beautiful hotel.”

“We’re able to enjoy our lives now,” says Johnny, 57. “This home has brought back the feeling that life is worth living.”

The Lysters’ apartment and 1 512 others like it across Ireland were built with the financial backing of the European Investment Bank. Social and affordable housing is a key priority for the EU bank. That’s because the market often fails to provide decent, safe, energy efficient housing for lower income populations, resulting in public health problems, shortages of key workers in central locations and poor use of energy. The Bank also aims to reduce social inequality.

Ireland social housing need ‘very significant’

The European Investment Bank works on Irish social housing with the Housing Finance Agency, a company backed by the Ministry for Housing, Planning and Local Government. The EU bank lends to the agency, which in turn finances “approved housing bodies” such as Clúid. The bank’s loans to the agency amount to €350 million since 2014 and it is currently reviewing another €200 million financing request from the Housing Finance Agency. “The need for social housing is very significant,” says Seán Cremen, head of treasury at the Housing Finance Agency. “The EIB has been one of the main drivers of accelerated building activity.”

Traditionally, local municipal governments handled Irish social housing. But the financial crisis a decade ago hit their budgets hard. Meanwhile, the approved housing bodies found it difficult to borrow long-term and couldn’t meet the need. (Cremen says that under the government’s 2016 Rebuilding Ireland strategy 47 000 new units will be needed by 2021 to cover demand.) The European Investment Bank’s financing allowed the agency to bridge that gap and finance bodies like Clúid long-term.

“This is really a sector where we made a difference since in 2014,” says Katalin Deppner-Quittner, the European Investment Bank loan officer on the Ireland social housing deals. “We provided financing at a significantly lower price when access to the capital markets was not so straightforward. But we also helped transform the business model of the approved housing bodies, the entities primarily responsible for developing and managing the social housing stock in Ireland.”

Hitting the numbers for Ireland social housing

Before the European Investment Bank stepped in, approved housing bodies like Clúid relied exclusively on government grants. Now they are financially responsible for managing their business to be able to repay their debt.

A measure of the EU bank’s impact on the rate of construction of social housing is Clúid. Two years ago, less than 6% of its work was in new constructions. By 2020, that will be up to 55%. In the next three years, Clúid expects to build 1 700 housing units.

“We wouldn’t have been able to do these numbers without the financing from the EIB and HFA,” says Cathal Callan, Clúid’s director of finance.

Ireland social housing public-private partnership

The European Investment Bank is developing other tools to boost social housing in Ireland, including a unique public-private partnership under which the National Development Finance Authority and private companies will deliver 1 500 homes. A partnership of the Macquarie Group, the John Sisk construction firm, and Choice and Oaklee Housing will build, operate and maintain the first 534 housing units over a 25-year contract with European Investment Bank funding of €60 million. The EU bank aims to support future phases of the scheme, expanding the project to social housing in other Irish cities, including Cork.

“It’s the first social housing public-private partnership we’ve financed,” says Thomas Briggs, one of the European Investment Bank loan officers working on the transaction. “A PPP increases the number of new housing units the state can construct, cuts waiting lists and upgrades existing housing stock more quickly.”

Need for affordable, as well as social housing

Social housing isn’t the only part of the Irish market that needs help. People whose income is too high to qualify for social housing often find themselves unable to pay city rents as much of the new development in cities are catered towards the upper end of the market. This often includes people in important roles, such as nurses, teachers and the police. For them, there’s a need for an increased supply affordable housing.

The European Investment Bank is advising the Irish government on its affordable rental-housing programme through URBIS, an advisory service for cities launched last.

 “It’s a potentially game-changing housing strategy that will have a long-term impact on the sustainability and social improvement of Irish cities,” says Kevin McGillycuddy, a senior economist at the European Investment Bank. “Our cities need to be sustainable and this is a step in the right direction.”

For Johnny Lyster, the life he lived before certainly was unsustainable. “It was killing me,” he says. “Every time I heard a knock on the door, I thought it was the landlord coming to throw me out or put the rent up.”

The difference now is “almost like a dream,” he says. “You look around and say to yourself, ‘Is this mine? Is nobody taking it away from me?’ Now I’m not throwing money away on heat. The kitchen’s amazing. The shower has hot water in it. It’s all perfect.”