Fergus O'Dowd (Louth, Fine Gael)
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61. To ask the Minister for Finance the details of the proposed HBFI fund of €750 million announced in budget 2018; and when it will open to persons; and if he will make a statement on the matter. [51287/17]

Paschal Donohoe (Dublin Central, Fine Gael)
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As announced in my Budget speech on 10 October 2017, it is my intention to establish Home Building Finance Ireland (HBFI) to provide funding on market terms to viable residential development projects which are experiencing difficulty in obtaining debt funding. HBFI will be a standalone entity which will provide funding directly into the market.

HBFI will be designed to leverage off the extensive experience already available to the State to deliver this initiative and as such existing NAMA staff skills and expertise will be utilised to deliver this funding. However any lending provided in due course will be provided by HBFI which will be fully separate and will not impact NAMA's existing objectives or its Board’s strategic wind down plans. The exact staffing and servicing arrangements are currently being devised by my officials and NAMA and will be confirmed in due course.

I would be hopeful of bringing the establishing legislation to the Houses of the Oireachtas for approval in early 2018, with a view to HBFI commencing operations later in 2018. It is not expected that HBFI will have an indefinite lifespan but it is too early to speculate on how long it may operate as this will depend on the availability of funding in the market to meet demand for homes in the coming years.

With a proposed allocation of up to €750m, it is estimated that HBFI could have capacity to fund about 6,000 homes in the coming years. The current estimated shortfall in residential supply is 15,000 – 20,000 units per annum and, accordingly, HBFI, with an annual average delivery of 2,000 homes, could help reduce this shortfall by about 10% (assuming a three year horizon). This would be a significant contribution but it would not make HBFI a dominant player in the residential funding market and it would clearly leave room for banks and other finance providers to increase their contribution to funding much-needed residential development.  

In relation to the products that will be offered by HBFI, the fund will be designed to focus on the provision of debt funding to viable residential development projects. This funding will mirror the type of lending which NAMA has provided to its debtors in recent years. As the Deputy will be aware, the State is already providing a number of alternative supports into this market, including equity finance, through the ISIF’s existing residential development funding platforms.  

In relation to the specific product terms and conditions that will attach to this lending, I am not in a position to provide detail at this time. I can confirm that HBFI will be lending on commercial, market-equivalent terms and conditions, which would depend on the risk profile of each individual project, the quality of collateral and the creditworthiness of the borrower. The specifics parameters for this will be set by the board of HBFI in due course having regard to the nature of the project and market conditions at that time.