Dáil Éireann Debate, Tuesday - 24 October 2017
48. Deputy Gino Kenny asked the Minister for Finance the conditionality there will be regarding affordability of houses that will result from the new Home Building Finance Ireland, HBFI, initiative; and if he will make a statement on the matter. [45304/17]
View answerIn my Budget speech on 10 October 2017 I announced a proposal to establish a new dedicated fund, Home Building Finance Ireland (‘HBFI’) to provide funding on market terms to viable residential development projects whose owners are experiencing difficulty in obtaining debt funding. Up to €750 million of ISIF funds will be allocated to HBFI to provide funding on market terms and the fund is estimated to have capacity to finance about 6,000 homes in the coming years.
HBFI will not be directly involved in development – its role would be solely as a commercial lender and therefore will not have any role in designing the housing mix contained in the schemes it funds. HBFI will provide lending on commercial, market-equivalent terms and conditions. This approach would be akin to a bank or private equity investor. As such HBFI will not have targets in relation to social or affordable housing but will provide a significant contribution to supporting the delivery of additional supply of all types of residential housing in the coming years.
Increasing the level of housing output will increase the affordability of housing more generally, which in turn also will have a positive effect on our ability to provide social housing. For example, any residential developments funded by HBFI will be subject to the same planning and regulatory requirements as all other developments. This includes policies relating to Part V of the Planning and Development Act 2000 and as such, it is expected that a minimum of 10% of the anticipated output of this investment by HBFI will become available for social housing through this statutory mechanism over this period.
The current estimated shortfall in residential supply is 15,000 – 20,000 units per annum and, accordingly, the HBFI, with an annual average delivery of 2,000 homes, would reduce this shortfall by about 10% (assuming a three year horizon). This would be a significant contribution but it would not make HBFI a dominant player in the residential funding market and it would clearly leave room for banks and other finance providers to increase their contribution to funding much-needed residential development.
Though HBFI is intended to be a debt funder for private residential projects, I can assure the Deputy that this Government is equally determined to increase social housing output over the coming years. For example, an increase of €31 million has been allocated to the Social Housing Current Expenditure Programme bringing the total to €115 million. This is expected to deliver an extra 4,000 social housing homes in 2018. In my Budget speech on 10 October 2017, I also announced an additional commitment to further accelerate the delivery of social housing from 2019. I am providing an extra €500 million for the direct building programme which will see an additional 3,000 new build social houses by 2021, increasing the existing Rebuilding Ireland target of social housing homes to 50,000, of which 33,500 will be delivered through construction.
