I propose to take Questions Nos. 83 to 85, inclusive, together.
Home Building Finance Ireland (HBFI) is being established as one of a number of measures to address the housing crisis. It will provide a source of funding for small to medium sized residential developments on a commercial basis. The Home Building Finance Ireland Act was signed into law by the President this Monday, 3 December 2018. Much progress has been made in preparing HBFI for launch and it is expected that HBFI will commence receiving funding applications towards the end of January 2019.
It is currently expected that an initial team of c.23 staff members will be employed by HBFI as the company commences operations. Similar to NAMA and the SBCI, all HBFI officials will be seconded employees of the NTMA. In order to ensure that HBFI is established in the most efficient manner possible it is envisaged that the NTMA shall first draw upon any relevant resources, services and experience that are already available within NAMA when appointing staff to HBFI. NAMA has amassed considerable expertise in this area through the implementation of its existing residential funding programme and this will be a key asset for HBFI.
Ultimately, it will be a matter for the Board of HBFI to determine the precise staffing levels required which will be commensurate with the level of demand for lending from developers. As a result it is not possible to estimate either the total number of staff or the number of NAMA staff that may ultimately transfer to HBFI at this time. The recruitment and transfer of all staff will depend on HBFI's requirements and the availability of appropriate resources in NAMA at that point in time.
Upon incorporation the Minister will provide equity of €20m which will be used to fund HBFI’s initial start-up costs. ISIF will then be directed to lend the remaining funding, of up to €730m, to HBFI at a market rate of interest in order to fund delivery of residential property. It is envisaged that this funding will be made available on receipt of funding requests from HBFI, the exact scale and timing of these requests will be dependent on market demand.
Exact lending rates provided to developers will be determined on a case by case basis following a credit assessment, but must be equivalent to market rates in order to comply with EU State aid rules. Based on current market rates and having sought third party market advice, it is expected that minimum lending rates of c. Euribor+5% would be applied for projects with an LTC of less than <50% ranging up to c.+8% for projects at c.80% LTC. A borrowing entity must provide a minimum of 20% equity, which can include the site value and HBFI may fund up to 80% of the LTC (Loan to Cost) of a project. The maximum term of a loan facility is expected to be be 5 years. Full lending terms and conditions will be approved by the board of HBFI in due course.