Paul Murphy (Dublin South West, Solidarity)
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99. To ask the Minister for Finance his views on the risks posed by Government plans to increase lending by the banks to property developers; and if he will make a statement on the matter. [16226/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The Government is committed to supporting the delivery of new homes of all tenure types, aiming to deliver 303,000 homes from 2025-2030. This year, over €6 billion will be invested in housing, through the Exchequer, the Land Development Agency and via Housing Finance Agency lending.

A report by the Department of Finance published in 2024 estimated that an average of €20 billion of development funding would be required each year to construct an average of 50,000 homes annually. This funding will be required from a diverse range of sources and will comprise debt and equity across the capital stack.

This report also found that while there is access to finance for viable residential developments, there are certain segments where viability is challenged and as a consequence there is constrained access to finance in these segments. This includes funding of land without planning permission, given the recent challenges we have faced with uncertainty in planning, including the timelines for planning decisions, and also apartment development for the private market, given the viability challenges in this segment.

To address this, the Government has introduced a number of initiatives. Most significantly, the Planning and Development Act was passed late last year. The Act represents one of the most ambitious pieces of legislation in the history of the State. It will speed up planning decisions, reform An Bord Pleanála and bring much needed certainty to the planning process. These significant reforms will combine to lower costs and improve viability for those seeking to deliver supply and move output toward target.

To support the viability of apartment development, the Government has introduced a number of schemes which seek to work with private funders and developers to support the delivery of additional apartment development. These include the Croí Cónaithe apartment scheme to support the delivery of owner-occupier apartments and the Secure Tenancy Affordable Rental investment scheme (STAR) which works with developers and equity partners to deliver cost rental apartment schemes. It is important that these schemes are used to maximise the impact of State investment in housing by working alongside private capital.

In relation to the funding landscape for residential development, the Irish funding landscape has undergone significant change since the Global Financial Crisis in 2008. The debt funding market in Ireland has matured in recent years and while there are a reduced number of domestic banks providing senior debt to residential development than was previously the case, there has been an increase in the number of non-bank lenders providing senior and stretch senior debt to residential development.

A report by the Central Bank in 2024 indicated that from a balance sheet perspective, the domestic banks have capital headroom to increase development finance. The allocation of banks’ capital towards residential development is a commercial matter for the banks, determined by the risk profile of the lending and related capital costs. Levels of debt should appropriately reflect the risk profile of development projects. The days of 100% debt funding for residential development are behind us and domestic banks set risk limits around the type and nature of lending activity, to ensure lending levels are sustainable and lending practices are prudent. While the domestic banks play a key role in supporting access to finance for residential development, a stable, diverse pool of sources of development funding is required for a sustainable funding landscape for residential development.

To further support access to debt finance for residential development, Home Building Finance Ireland was established in 2019. HBFI provides debt finance to small, medium and large housebuilders for commercially viable developments, responding to gaps in the funding market and supporting the construction of new homes across the country. To the end of 2024, HBFI has approved over €2.7 billion development funding, supporting the delivery of over 13,000 homes across 23 counties.

Under Section 24 of the HBFI Act, HBFI must be reviewed every two years. A review is currently underway and will be completed in May 2025. This review will assess the funding landscape for residential development, the availability of funding and the extent to which HBFI has performed its functions. The report will also determine whether HBFI should continue in operation.

The Ireland Strategic Investment Fund also supports the provision of funding for residential development. ISIF invests in development finance, infrastructure and enabling complex sites and to provide equity to homebuilders.

As we seek to scale up delivery a diverse pool of development funding will be required. Investment from a diverse range of sources including the State, banks, and the non-banking sector will be central to increasing the supply of new homes.