With the permission of the House, I will now take Parliamentary Question No. 8 as Deputy Wallace sent me a message in that regard. However, I will penalise him by not allowing him 30 seconds to introduce the question.
Thursday, 7 December 2017
Questions (8)
Oral answers (13 contributions)
What did I do to deserve that?
The Deputy was late.
It will be of assistance to Deputy Wallace.
The Leas-Ceann Comhairle is making it up as he goes along.
I am being pragmatic.
Mick Wallace
Question:8. Deputy Mick Wallace asked the Minister for Housing, Planning and Local Government further to the announcement by the Minister for Finance of the creation of Home Building Finance Ireland, HBFI, if his Department has engaged with the Department of Finance regarding HBFI; the role he envisages his Department playing with regard to HBFI; if he has satisfied himself that HBFI will bring the required funding into the area of residential development; and if he will make a statement on the matter. [52273/17]
View answer
As announced in budget 2018, my colleague, the Minister for Finance and Public Expenditure and Reform, Deputy Donohoe, intends to establish 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.
Officials from my Department have met with Department of Finance officials on the matter and will continue to engage with them as the enabling legislation is developed. I understand that the Minister, Deputy Donohoe, will bring forward the relevant legislation to the Oireachtas in early 2018, with a view to commencing operations later next year.
With a proposed allocation of up to €750 million, it is estimated that HBFI could have capacity to fund the construction of around 6,000 new homes in the coming years. I welcome the addition of this new instrument that will further support the delivery of projects to supply much-needed new homes. The measure will bolster the strong supply-side measures introduced to date under Rebuilding Ireland which are beginning to have a positive impact.
In its role as a commercial lender, HBFI will not have any remit in designing the housing mix contained in the schemes which it funds. However, developments funded by HBFI will be subject to the same planning and regulatory requirements as all other developments, including the delivery of social housing under Part V of the Planning and Development Act 2000.
Although finance for builders is a good idea, is it correct that approximately 8% is being proposed? Will NAMA have any involvement? As Members know, none of the houses in which NAMA has had an involvement will be sold at an affordable price. It is considering a minimum of approximately €350,000, which is not an affordable price for most people in Ireland who need a house and cannot get one.
I am 100% in favour of the State facilitating small developers to build by organising finance for them because, as we know, many of them are struggling to obtain finance. Large developers can build, but the State has the option of cutting them out and working with small developers by financing them. This could have a huge impact on the supply of housing. Housing must be provided at an affordable price. Given that the State can borrow money at less than 1%, surely a rate of 8% is draconian.
I agree with the Deputy that builders in many parts of the country are experiencing difficulties in obtaining finance at an affordable rate to allow them to undertake projects that are viable and can deliver houses at prices people can afford. We have introduced a number of measures to help with construction and development costs in site development. For example, the An Bord Pleanála process has been fast-tracked and the local infrastructure housing activation fund, LIHAF, has been put in place, which essentially is the Government paying the development levies. We have also introduced the help-to-buy scheme and are now introducing Home Building Finance Ireland, HBFI, which will be a new source of finance for builders who cannot get it from the traditional lenders. I cannot comment on what the exact rate will be, but it will be provided for in the legislation when the Minister brings it forward. However, I do know that it will be competitive and commercially viable.
On HBFI interactions with NAMA, my understanding is it will sit alongside NAMA and that there will be a service level agreement under which staff will be seconded to work in the new entity which will work to provide finance for builders and developers throughout the country to have more homes built more quickly at more affordable prices.
There is potential for Home Building Finance Ireland, HBFI, to be a positive development. I do not, however, see any rationale for NAMA's involvement in HBFI other than in relation to how money might be provided off the books. On several occasions in this House I have heard Members speak about availing of the expertise available in NAMA on housing. It is well known that it does not have that expertise. It simply engages large developers, with which it has found favour, to provide that expertise. To say it has expertise on housing is a little like saying former Anglo Irish Bank employees had expertise in the supply of housing during the boom times, which was not the reality. The Government has no scheme or structure in place to tackle the lack of affordable housing coming onto the market in Ireland. The previous scheme which was far from perfect was done away with in 2011. We now need a different type of scheme. Currently, the State is making no effort to supply affordable housing.
As the Deputy will be aware, traditionally large developers would have had access to finance; therefore, I would not expect them to approach HBFI for it. Home Building Finance Ireland is a new entity that will provide finance for small builders and developers throughout the country at competitive commercial rates of interest to enable them to build more homes at affordable prices. We have a different view on NAMA and the expertise available therein. There is a body expertise available within it that has been working in the State's interests for the past few years. As NAMA winds down and comes to the end of its life cycle, there is potential for this State resource to be put to very important use - having more homes built more quickly and at more affordable prices.
On the Deputy's comment that the State is doing nothing to provide affordable housing, apart from the affordability scheme which I will announce, we have put in place a number of measures, including the €200 million provided for the LIHAF to open up new sites more quickly, which will result in the provision of housing at more affordable prices. A second round of LIHAF funding was announced in budget 2018.
The LIHAF is not helping.
LIHAF 2 will bring about the provision of affordable houses. Some 10,000 units have gone through the pre-consultation and the An Bord Pleanála fast-track process. All of these measures have been put in place to try to remove some of the last impediments to building more homes more quickly and at more affordable prices. They will start to come on stream towards the end of this year and in 2018.