The social housing funding conundrum: Is securitisation the answer?

It is now widely acknowledged – both anecdotally and through sectoral reporting – that delays in securing planning and funding approvals continue to hinder the progress of approved housing bodies (AHBs).

Processes that once took three to four months are now extending to twice that duration, resulting in significant project delays, deferred housing delivery, and a deepening of Ireland’s ongoing housing crisis.

Given these persistent challenges, it may be time to consider alternative funding mechanisms.

International financing advantages

There are compelling reasons to diversify funding sources beyond the government-backed Capital Advance Leasing Facility (CALF), which has become increasingly constrained. Numerous AHBs, including Clúid Housing, have reported that shovel-ready developments are being held up due to delays in CALF approvals – a challenge that is frustrating for all stakeholders.

Compounding the problem is the continued retrenchment of traditional lenders, particularly the pillar banks, from property and housing finance since the 2008-2011 financial crisis. In this context, accessing international capital markets and leveraging established financial instruments such as securitisation vehicles warrants serious contemplation.

Securitisation has demonstrated resilience and efficiency in other asset classes, offering potential benefits such as:

• broader access to capital pools;
• diversification of funding sources; and
• enhanced liquidity in the housing sector.

These advantages could contribute to a more consistent, cost-effective, and timely delivery of much-needed housing stock.

Recognising the challenges

Securitisation is not without its complexities. These structures are inherently sophisticated and typically attract institutional investors with a high degree of financial acumen. Legal considerations – particularly around the assignment of contracts and the vesting of rights within the securitisation vehicle – must be carefully managed to ensure compliance and investor confidence.

Moreover, enforcement mechanisms in the event of insolvency can be intricate. Most critically, there is a potential misalignment between the financial objectives of investors and the social mission of affordable housing. Balancing return on investment with the imperative to provide secure, long-term housing for vulnerable populations remains a key concern.

A path forward

Despite these challenges, the current funding model is clearly unsustainable. Housing remains the foremost domestic policy issue, and innovative solutions must be explored. While securitisation may not be a perfect solution in isolation, it represents a credible and potentially transformative component of a broader funding strategy.

Engaging with capital markets – alongside robust regulatory oversight and alignment with social objectives – could help unlock the scale and speed of delivery that the sector so urgently requires.

Aaron McGarry – Director
T: 01 828 0665
E: aaron.mcgarry@fieldfisher.com
W: www.fieldfisher.com/en-ie/locations/ireland