Michael McGrath (Cork South Central, Fianna Fail)
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5. To ask the Minister for Finance his plans to establish Home Building Finance Ireland, HBFI; the expected timeframe for it to be operational; the number of homes he expects it to fund; the terms and conditions that will apply to the loans; and if he will make a statement on the matter. [44939/17]

Michael McGrath (Cork South Central, Fianna Fail)
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I am raising a question about the budget day announcement concerning HBFI. I think everyone in the House accepts that finance is an essential ingredient in delivering the homes we want to build for our people throughout the country. Specifically, when does the Minister anticipate the fund to be up and running and providing finance for home construction? Will the terms and conditions be on a commercial basis and attractive enough that the loans will actually be drawn down and used?

Paschal Donohoe (Dublin Central, Fine Gael)
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As announced in my budget day speech on 10 October 2017, it is my intention to establish HBFI to provide funding on market terms to viable residential development projects whose owners are experiencing difficulty obtaining debt funding or credit. HBFI will be a stand-alone entity that will provide funding directly into the market. It will be designed to leverage off the extensive expertise already available to the State to deliver this initiative and, as such, existing NAMA staff skills and expertise will be utilised to deliver the funding involved. Any lending provided in due course will be made available by HBFI and will not impact on NAMA's existing objectives or its board's strategic wind-down plans.

In answer to the Deputy's final question, I hope to bring the establishing legislation to the Houses of the Oireachtas for approval either later this year or in early 2018, with a view to HBFI commencing operations by the second quarter of next year. It is not expected that it will have an indefinite lifespan but it is too early to speculate as to how long it might operate as this will depend on the availability of funding in the market to meet demand for homes in the coming years.

Michael McGrath (Cork South Central, Fianna Fail)
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What consideration has been given to the terms and conditions that will be attached to the credit that this new agency will be able to provide? One of the reasons the Activate Capital fund has not been hugely successful is that the initial cost of funding was very high. I think it was as high as 14% but has come down significantly since then. The fund has had some success but not, I think, at a level others might have expected. Will the Minister clarify what will be the terms and conditions associated with the funding that this new body will provide? Will he confirm that the legislation is under preparation and that he will bring it before the House on schedule?

Paschal Donohoe (Dublin Central, Fine Gael)
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The legislation is under preparation and I am confident that I will be in a position to publish it towards the end of this year and bring it before the House in the early part of next year.

Regarding the terms and conditions relating to the credit and how it would be made available to companies, it must and will be made available on commercial and market-equivalent terms. In other words, the way in which this funding will be provided must be consistent with the commercial terms upon which funding is provided elsewhere in the market. I have studied the operation of the Activate Capital fund, the success of which to date has shown that there is a need for credit in a way that our banks are not able to facilitate at present. As I bring the legislation before the House, I am confident we will be able to create an entity that will be able to do this. At this point, I am not in a position to be able to comment on what the rate of interest will be because much of that will depend on the quality of the individual applications made to HBFI once it is set up.

Michael McGrath (Cork South Central, Fianna Fail)
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Will the Minister clarify whether this new fund will only finance private home construction? What role, if any, will it have in the construction of social or affordable housing? For example, will approved housing bodies be able to avail of funding from this new organisation for the construction of voluntary housing association houses or social houses that they will be delivering as part of schemes? Will the Minister confirm that?

Paschal Donohoe (Dublin Central, Fine Gael)
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It is my intention at this point that HBFI would primarily be focused on the private sector. The rationale behind this thinking is that in dealing with approved housing bodies and local authorities, my experience is that the issue they face is not the rate of interest on the credit they need. In many cases the funding they need is provided directly by the Exchequer. For this reason, my current thinking is that HBFI will be primarily focused on the private sector. However, in the course of the Bill's passage through the House, if Members have suggestions as to how this might be amended or if it needs wider breadth to deal with the long-term objective of increasing housing supply, I will be open to dealing with Deputy Michael McGrath and others on that point.