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Supporting the delivery of new homes

The delivery of new homes has many different elements, it needs lots of willing market participants and a broad range of different stakeholders to get the final product delivered, writes Darragh Lennon, Head of Commercial at Home Building Finance Ireland.

One thing that is needed to deliver homes is finance. The more finance is removed as a barrier to delivery, the greater the population of builders and developers who are able to deliver, having a positive impact on supply.

Home Building Finance Ireland (HBFI) was established by the Government in 2019 to help ensure debt finance was not, or did not become, a barrier to the delivery of new homes. HBFI operates on a commercial basis, and this basis is enshrined in the legislation that underpins us. In practice what that means is that HBFI is designed to provide debt finance for commercially viable residential development, to compliment the main banks.

Commercially viable broadly means that a scheme needs to be able to stand alone and provide a sufficient return for a developer or builder while covering its costs. We believe the size of the scheme does not have to impact on whether or not it receives debt finance and for any scheme delivering more than five units we can, and do, make finance available. We lend to builders and developers, just as banks or other lenders do, but typically focus where the main banks may have less of an appetite to lend. That could mean in a particular location, with a particular customer or at a particular risk level. The most important thing underpinning our approach is flexibility, we work with our customers to find ways to get finance in place even where there may be challenges.

Up to the end of April 2023, we have approved over €1.3 billion in funding to support the delivery of over 6,100 new homes. These numbers continue to grow month by month and our goal is to ensure no viable scheme goes unbuilt due to a lack of debt availability. We are financing a wide variety of schemes for private sale, for use as social housing, affordable housing, both houses and apartments and broader mixed developments.

Understanding what is happening in the market is important to us, because it helps us to fulfil our mandate. That means in practice, we want to be involved in as many conversations as we can with builders and developers around funding so that we can understand any barriers that exist, or issues that might be emerging, preventing them from securing debt finance, or the right kind of debt finance. We also work closely and engage extensively with the broader sector, with government agencies, local authorities, industry bodies, the advisory community, politicians, and the business community. It is by looking as broadly as we can that we can gain a real understanding of what is happening on the ground, where the barriers are for builders and developers and how we can help or change our approach as needed.

Dundoogan, County Louth where HBFI have funded 128 new homes which were sold on the private market.

“Up to the end of April 2023, we have approved over €1.3 billion in funding to support the delivery of over 6,100 new homes. These numbers continue to grow month by month and our goal is to ensure no viable scheme goes unbuilt due to a lack of debt availability.”

We have demonstrated this flexibility in the way we have evolved since our establishment. The creation of the momentum fund during the early stages of the Covid pandemic is a good example of this, where we identified a potential finance availability gap which could emerge due to the uncertainty created by the pandemic and responded to that. This fund made €300 million of funding available and supported the delivery of 1,018 new homes at a time when there was significant market uncertainty. We will continue to take a flexible approach to both individual transactions on a customer-by-customer basis and adjust our overall approach with the market to make sure that potential debt financing gaps get filled.

There is no silver bullet solution to increasing housing supply, but the many initiatives introduced under Housing for All have seen a steady increase in completions starting to come through. As these initiatives come into place, it is critically important that providers of debt finance understand them and their impact and work closely with customers to maximise the value and impact that they can have. With that in mind, the role that we in HBFI can play remains very important, by making sure we have an understanding of all the relevant initiatives and well-established relationships with stakeholders across the sector, both public and private, we can make sure that finance remains available to our customers.

By being part of the conversation, listening to the market and adjusting as we go, we can and are playing our role in making sure that no viable scheme remains unbuilt.

Home Building Finance Ireland
Treasury Dock, North Wall Quay
Dublin 1, D01 A9T8
T: 01 238 4600