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Foundations for Residential Development Finance – Simon O’Neill looks at the Home Building Finance Bill 2018

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:

  • on commercial, market equivalent terms and conditions appropriate to the risk profile of the project, quality of collateral and creditworthiness of the borrower.
  • benchmarked to the market
  • for sites controlled by borrowers with the benefit of full planning permission and a minimum delivery capacity of 10 units
  • for commercially viable sites.


Challenges to be faced?

  • EU State aid rules: Under EU rules any commercial activity by the HBFI must be on market equivalent terms to those of rival lenders. HBFI would not be directly involved in development rather its role would be solely as a commercial lender.
  • Dominance: The current estimated shortfall in residential supply is 15,000-20,000 units per annum, the projected annual delivery by HBFI would be 2,000 units thereby targeting a 10% reduction in shortfall. The intention is to leave room for banks and other finance providers to increase their contribution and ensure HBFI could not be said to be dominant on any relevant market.
  • Experience: The National Asset Management Agency (NAMA) has developed experience through its NAMA debtor residential funding programme which can be utilised and applied by HBFI in its lending approach.


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


Simon O’Neill