Marc MacSharry (Fianna Fail) | Oireachtas source

I thank the Minister for taking the time to deal with this motion. I did not believe that it would be him who would be present.

This motion is in connection with the Ireland Strategic Investment Fund, ISIF. As the Minister undoubtedly knows, part of the Government's two-pronged approach in the budget to the housing crisis was NAMA's programme to build a certain number of houses between now and 2020. Being from outside Dublin, I am concerned that some 90% of those houses will be in Dublin. It is not that Dublin does not need housing. However, more houses are needed across the country as well. We have heard this on the news constantly in recent weeks.

The second part of the approach is the ISIF offering loans to encourage investment through the private sector with a view to starting residential building throughout the country. Under the management of the National Treasury Management Agency, NTMA, the ISIF has joined together with KKR to establish Activate Capital, which allegedly will focus exclusively on lending to the Irish residential sector.My concern about this is that the interest rate to be charged is as high as 14%. While that is consistent with what some of the commercial high street banks are seeking, and they are only prepared to lend up to 60% or maybe in some instances 70%, Activate Capital may consider lending up to 90%. That loan-to-value ratio would certainly be positive, but a rate of 14% is prohibitive in a market where we are not getting enough product out. I never thought I would say this, but we probably do not have enough active developers out there at the moment. Some fellows are caught up with NAMA or bankruptcy, while others are finished because their credit ratings are down and so on. That aside, however, even to encourage or breed new developers at 14%, it is not at a rate or terms that are now necessary to kick-start the market.

Can the Minister clarify whether, in fact, the rate is as high as 14%? If so, can it be revisited through the National Treasury Management Agency and its work with KKR? While we certainly want a return for the taxpayer in terms of the €500 million to be invested here, we also want to be strategic about it and ensure that we get the desired output. We do not just want to make profits for the NTMA or KKR, the private sector aspect to the fund; we also want to see housing built and developments throughout the country, whether in Limerick, Sligo or with additional resources in Dublin where we know they are much needed. It will be done at rates that take a margin for the State but also make it sufficiently attractive to breed new development and new developers to get much needed housing throughout the country.