DG State Aid – Control and Regeneraton of Deprived Urban ... - REVIT

N209/2001 Guarantee for Borrowings of the Housing
Finance Agency - Ireland
This measure aims at the provision of housing for the most socially disadvantaged
households, and in particular for those households which due to their economic circumstances
are unable to fund their own housing requirement at socially acceptable conditions through
recourse to commercial lenders.
The Irish Minister for Finance provides the guarantee to support the Housing Finance
Agency (HFA) in its borrowing and fundraising activity. The funding is then advanced
to local municipalities to be used by them for public service purposes, namely the
funding of the statutory social housing obligations of local authorities. The HFA a
company limited by shares promoted by the Minister for the Environment and Local
Government and regulated by public law with its Board being appointed by the
Ministers.
The local municipalities establish eligibility for social housing loan finance by reference to
the following considerations:
• Need must be established.
• Households are eligible when they are subject to income and loan limit ceilings.
• Households are eligible which seek to avail of schemes unavailable in the private sector.
• Households are eligible when they are included in local authority housing lists.
In its assessment of the measure the Commission considered the HFA as an instrument of the
state that fulfils practically “in-house” activities. Thus the guarantee granted by the state for
its fundraising was regarded as a transfer within the state not coming under the competition
rules of the EC Treaty. On the other hand, the Commission found the local municipalities to
be in competition with other operators in the housing market as they are offering cheaper
housing conditions, through rents and construction loans, to certain consumers. As this
activity is supported by the state through the cheap guaranteed funding from the HFA, state
resources are involved. Furthermore, as only certain municipalities are allowed to transfer this
advantage of cheap funding to consumers, they are favoured in the sense of Article 87(1) of
the EC Treaty and thus competition is distorted with respect to the other operators in the
market. In the Commission’s view, the state aid measure could not have been exempted under
Article 87(2) or Article 87(3) of the EC Treaty, because the conditions mentioned in these
paragraphs were not fulfilled. However, the aid measure was found compatible with the
common market pursuant to Article 86(2) of the EC Treaty as the conditions for applying this
provision were fulfilled.
For Further Information:
Decision:
http://ec.europa.eu/community_law/state_aids/comp-2001/n209-01.pdf
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