Michael McGrath (Cork South Central, Fianna Fail)
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Section 24 of the HBFI Act provides for a periodic review of HBFI to ensure that it is fulfilling its functions as set out in the Act and that its continuation remains necessary given prevailing market conditions.

To inform the Review, the Department of Finance undertook stakeholder engagement and also sought the views of both the HBFI Board and the Department of Housing, Local Government and Heritage.

A total of 19 responses were gathered from external organisations as part of the consultation process. This included 5 written responses, as well as direct engagement and discussion with a number of additional stakeholders. Responding external organisations included a mix of funding providers, developers, investors and industry representatives.

Through the consultation process, stakeholders provided feedback on the impact HBFI is having on the market for residential development finance, as well as feedback on the funding landscape for residential development more generally.

A clear consensus has emerged that HBFI has a key role to play in supporting access to finance for residential development finance. The review has concluded that evidence of funding gaps remain that necessitate the continued operation of HBFI at this time, with some segments of the market experiencing greater funding constraints than others.

Therefore, it is recommended that as HBFI assess future strategies and products, it remains cognisant of available alternative funding sources and continues to focus on those areas of the market that are underserved by existing providers of development finance.

Up to the end of April 2023, HBFI had approved over €1.3 billion of funding, supporting the delivery of 6,161 homes across 22 counties.

In addition to supporting current funding gaps, it is also important that HBFI remains agile and can respond to any emerging disruption in the market, which HBFI is in a position to support.

The consultation and stakeholder engagement process also considered whether concentration limits imposed by senior lenders are currently constraining access to finance for residential development.

This process found that, although concentration limits imposed by senior lenders were not found to be a systematic issue impeding supply at present, lenders and developers did indicate that concentration limits could become a potential barrier to scaling up in future, particularly as a consequence of unlocking capital-intensive apartment delivery.

As a result, one of the recommendations arising from this review, is that HBFI should develop a product which can be deployed to address this funding gap should it arise. This product should provide either standalone and/or syndicated facilities with pillar banks, or international lenders on terms similar to those offered from pillar banks.

Based on the submissions to the public consultation, stakeholder engagement and the assessment of input from the HBFI Board, I am satisfied that during the last two years of operation, HBFI has met its obligations and is having a positive impact on the availability of funding in the development finance market and I have concluded that HBFI should continue in operation at this time.

A further review of HBFI will take place in 2025.