Dáil Éireann Debate, Thursday - 27 May 2021
136. Deputy Cian O'Callaghan asked the Minister for Finance if he will consider prohibiting the use of funds allocated through the Irish Strategic Investment Fund and Home Building Finance Ireland for the construction of homes that are then sold onto investment funds; and if he will make a statement on the matter. [29002/21]
Amharc ar fhreagraThe Irish Strategic Investment Fund and Home Building Finance Ireland continue to make significant contributions to support increasing housing supply. It is important that they continue to do so given the current housing crisis.
ISIF’s investment in the residential development sector is aimed at unlocking the supply of new homes across all tenures. ISIF’s single largest investment to date has been in Activate Capital, which lends to Irish homebuilders undertaking new construction projects aimed, overwhelmingly, at the owner occupier market. ISIF has also supported new construction that is adding to the stock of rental accommodation in our major urban centres in line with market demand. To date, ISIF has directly committed €937 million which is supporting the supply of 15,000 new homes across 100 construction sites nationwide, which includes 2,500 new rental properties.
ISIF, as part of a wider suite of Government measures, is therefore making an important contribution to increased housing supply which is vital to addressing many of the challenges in Ireland’s residential property market.
HBFI was established in late 2018 as a Government initiative to address a shortfall of finance available for the construction of residential housing. HBFI was designed to increase access to residential development finance generally and in particular to projects that had not been the current focus of traditional or alternative lenders at that time. It was also designed to be able to adapt to changing conditions in the financing market.
Accordingly following the outbreak of Covid-19, HBFI widened its remit on a temporary basis to allow it to provide finance for larger prime residential projects that were experiencing difficulties in accessing financing. In May 2020, HBFI established a €300 million temporary step-in fund which is known as their “Momentum Fund”. This was to help ensure that supply was not interrupted due to a tightening of financing markets.
Again reacting to changing market conditions, HBFI brought other additional products to the market including a small development product specifically for smaller projects of between 5 and 10 units and an apartment product.
HBFI does not fund institutional investment, HBFI provides development finance to builders and developers to enable construction of residential property. HBFI has provided funding across a range of development sizes including for the construction of homes for private rental. HBFI funding has enabled construction to proceed on these projects to deliver much needed supply and not to displace the construction of residential homes for sale.
Since inception, HBFI has approved funding to house builders to support the delivery of up to 2,400 homes across 17 counties. Of these, 5 developments (out of 52 approved) are subject to forward purchase PRS sales and represents 916 units approved of which 851 (93%) are apartments and 65 are houses.
HBFI has €730m of funding available for residential development, with an ability to raise a further €750m if required. It is important to recognise that the temporary funding of large-scale developments has not, and will not, impact on HBFI's ability to fund small and medium sized developments. These smaller developments are the core of HBFI’s business and will continue to remain so.
