Ireland’s Social Housing

This article is the first in a series exploring Ireland’s deepening social housing crisis. With 2025 delivery set to drop, our Banking and Debt Capital Markets teams explore why fresh funding models, like those used in the UK’s social housing sector, are vital. They examine the funding gap, the role of Approved Housing Bodies, and how Ireland can chart a new course out of the current crisis.

Ireland’s housing crisis, government targets

Ireland’s ongoing housing shortage has escalated into a national crisis. The continuing failure, in a country as affluent as Ireland, to provide accessible, affordable and dependable housing that can meet the country’s needs now dominates the national agenda. The negative effects the housing crisis has on our society are further amplified against the backdrop of global economic and geopolitical uncertainties.

The Government’s 2021 Housing for All strategy set an initial target of delivering 300,000 homes by 2030, averaging at least 33,000 new homes annually. However, the Government’s own National Planning Framework has since revised that target upwards. It states that around 50,000 new homes will be needed every year until 2040, in order to meet projected population growth, which is expected to reach 5.7 million.

The Housing for All plan contemplates four broad categories of housing, each of which has its own specific targets:

*In Ireland, ‘social housing’ is frequently used as an umbrella term in the context of social, affordable and cost rental units. However, as illustrated in this table, social housing, affordable purchase housing, and cost rental housing are actually separate elements of the overall housing mix.

Missing the mark

Despite significant pressure on providing new homes and the ambitious targets set, recent statistics released by Government and industry sources, are not particularly encouraging. Some of the more recent reports have included:

• The Central Bank of Ireland's Q1 2025 Bulletin, released in March, which found that while housing activity is expected to rise, investment is forecast to remain below the required levels. According to the report, housing completions are expected to reach only 35,000 and 40,000 in 2025 and 2026, respectively (a downward revision).

• The Irish Times recently reported that figures in the Department of Housing’s Social Construction Status Report Q4 2024 meant that the State missed its target for the delivery of social homes in 2024 by almost 20%.

• More recent figures from the Central Statistics Office showed that new dwelling completions had risen only 2% in Q1 2025 from the same period last year. Significantly, the Government missed its target on new build social homes last year, with a shortfall of more than 1,400 units.

It's also worth noting that housing targets and estimates set by the private sector can often contradict those set by the Government, which add to an overall sense of confusion. For example, a Davy report in February 2025 suggested that the housing targets should in fact be 93,000 units per annum until 2031, almost double the target set by the Government.

The role of social housing

In this context, the ability of the State to rapidly scale up the delivery and supply of new housing is coming under heavy scrutiny. Social housing represents the lion’s share of the State’s public housing targets and will be fundamental to the Government’s attempts to meet the overall housing target.

Social housing plays a pivotal role in providing homes for individuals and families who cannot afford to rent or purchase through the private market. They are often vulnerable to increases in rent, or landlords who want to sell the rented house, etc. This sector is primarily managed by local authorities and Approved Housing Bodies (AHBs). AHBs are non-profit organisations, many of which have charitable status, and are authorised and regulated by the Approved Housing Bodies Regulatory Authority (AHBRA).

There are 437 AHBs in Ireland as of February 2025, but only a small number have achieved significant scale. The Housing Alliance is a collaboration of seven of the largest AHBs, comprising:

• Clúid Housing
• Circle Voluntary Housing
• Co-operative Housing Ireland
• Oaklee
• Respond
• The Iveagh Trust, and
• Tuath Housing

Together, they manage nearly 50,000 homes in Ireland. These seven AHBs, in particular, will be instrumental in the attempted delivery of the Government’s housing targets going forward.

The AHBRA, established in 2021, is the independent statutory regulator responsible for overseeing the operation of AHBs. Its aim is to safeguard public and private investment in the AHB sector and ensure that the housing stock is managed sustainably. The statutory framework is intended to provide assurance to investors, tenants, the Government, and the AHB sector itself that social housing providers can continue to operate in a well-regulated and stable environment.

As part of this, AHBRA’s Regulatory Framework sets out key standards that AHBs must meet. This includes a financial standard which, among other things, requires AHBs with complex funding to implement a treasury management mechanism, incorporating a liquidity management function. Any treasury strategy adopted by an AHB should reflect the financial complexity of the AHB. Arguably, the current near-total concentration of funding with the Housing Finance Agency (HFA), particularly by larger AHBs, could fall foul of this requirement.

Among the AHBRA’s strategic priorities over the next three years are:

• Embedding regulation
• Promoting trust and confidence through stakeholder engagement, and
• Enhancing its operations to support compliance and efficiency

We are therefore likely to see a maturing and strengthening of the regulatory framework for AHBs over the coming years. The credibility of robust regulation is likely to stand to AHBs seeking funding from a wider range of lenders. It is worth noting that in the UK, the regulated status of social housing providers was a key element in opening up the capital markets for these entities for social housing bonds. This is something we will discuss in more detail in future instalments of this series.

Funding the scale-up of social housing delivery

One of the most critical elements required to successfully deliver the targeted 90,000 social housing units by 2030 will be ensuring that AHBs can access the necessary funding to construct or acquire these units. Some of this funding will appropriately come from State/Government sources, such as the HFA. In addition, some should, in the normal course, come from private sources. This aligns with Housing for All, which states that:

“Non-State sources of funding will be crucial to the long-term success of Housing for All. International capital markets and private investment, both domestic and international, will play a key role…

“External sources of finance will be needed to bridge the gap between the overall funding requirement to build an average of 33,000 homes each year, and that provided via direct Exchequer funding, State borrowing, Home Building Federation of Ireland and the domestic banking sector.”

This makes it clear that a diversified approach to funding housing construction generally is anticipated.

Currently, the Government provides significant financial support to AHBs through the HFA, which offers loans to AHBs for the construction and acquisition of social housing. Housing for All states that the HFA “with its long experience in the sector, is well placed to play a lead role in continuing to finance local authorities, AHBs and the education sector to deliver housing”. The Government has also undertaken to provide the HFA with “the necessary resources” to match the demand for financing over the lifetime of Housing for All.

In addition to the HFA funding, AHBs have accessed non-State funding via bank lending. This bank debt is often drawn from the Irish domestic pillar banks or, less often, from some international lenders. However, bank debt can have some notable drawbacks, including a perceived lack of flexibility, poor rates and covenant-heavy documentation. It is worth noting that banks themselves have faced increasingly strict capital requirements in recent years, which has negatively impacted their ability to lend in certain circumstances, particularly longer-term loans at fixed rates.

Within the original Housing for All plan, the Government had committed to €4 billion of funding per annum for housing, through direct Exchequer funding, Land Development Agency funding, and HFA funding. However, with housing targets being continually revised upwards, it’s not clear that the Government, and by extension the HFA, will be able to provide all required funding to AHBs in a timely and efficient manner. Most recently, Budget 2025 saw the Government commit to an increased amount of €6 billion capital investment in housing, which includes €2.1 billion of capital funding for social homes.

Ultimately, if it is possible for AHBs to access alternative sources of capital from private sources, there is arguably no reason why the State should continue allocating such a substantial portion of its limited financial resources to social housing. This is particularly true at a time when the State should be carefully managing all available resources to safeguard against potential external macro shocks.

"Old keys won't open new doors" – the need for alternative funding

There is a clear acknowledgement that alternative sources of funding will be needed to complement the Government’s resources. The delivery of new housing is a social and political emergency and the ability to rapidly scale-up investment and funding of housing is a key priority.

In the next instalment in our series, we will examine the current funding landscape for AHBs, in particular. We will look at the potential blockages and challenges they face in accessing capital and argue that their current reliance on HFA funding is not sustainable in the long term. We believe there is a clear and urgent need for AHBs to diversify their funding sources and look beyond the traditional State channels.

For more information and expert financing advice, contact a member of our Banking or Debt Capital Markets teams.

The content of this article is provided for information purposes only and does not constitute legal or other advice.