Thursday, November 8, 2018
The Home Building Finance Ireland Bill 2018 has recently passed Committee Stage (the “Bill”) in the Oireachtas. The Bill provides for the establishment, funding and operation of Home Building Finance Ireland (“HBFI”) an entity to be managed by the National Treasury Management Agency.
HBFI is being established as a temporary measure to address a shortage of funding in the supply of new housing. Lack of finance has been identified as a key contributing factor to the shortage of residential housing supply. The intention is that by increasing the availability of credit/access to debt funding the availability of credit for projects is not currently the focus of the main banks or alternative lenders.
Traditional lenders whilst increasingly active in the market, are at more conservative levels than before. Alternative lenders are operating in the market and estimated to have advanced up to €1 billion to date (post crisis). However there is a concern that debt finance constraints could emerge if house building levels were to increase to required volumes (30,000 to 50,000 units).
HBFI will be funded by the provision of €750m by the Ireland Strategic Investment Fund (“ISIF”) which it will lend to developers on commercial terms for commercially viable residential projects. It is estimated that this could fund approximately 6,000 homes and alleviate the current shortfall in residential supply.
HBFI loans will be:
Challenges to be faced?
HBFI is part of the Government’s strategy to support the supply of residential housing which include the Rebuilding Ireland action plan, Local Infrastructure Housing Activation Fund, vacant site levy and other policies.
If you have any queries concerning the Bill or consider that securing HBFI finance could be relevant for your project please contact the Simon O’Neill