Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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772. To ask the Minister for Finance given that states generally have access to cheaper finance than the private sector, to outline the differences in financing costs for the delivery of large social housing projects compared to large private housing projects (details supplied). [44353/25]

Paschal Donohoe (Dublin Central, Fine Gael)
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The debt market has evolved in recent years with the reduction of the number of domestic banks providing development finance, the rise of alternative lenders and the increased involvement of State backed entities such as Home Building Finance Ireland (HBFI), the Housing Finance Agency (HFA) and investments enabling housing delivery through the Irish Strategic Investment Fund (ISIF).

The cost of providing finance is mainly driven by the risk of each individual project. The risk is impacted by several factors such as planning uncertainty, infrastructure deficits, construction cost inflation, market segment such as apartment development and other similar factors.

A key difference in the cost of finance between social and private housing is that typically social housing is seen as being a lower risk project for the developer to build. This often results in a lower cost of finance for social housing.

This is because social housing will normally have a guaranteed purchaser such as a local authority or an approved housing body or similar party, lowering the overall risk for the developer by having a confirmed buyer before the project begins construction.

A report by the Department of Housing, Local Government & Heritage in 2024 estimates that the cost of finance amounts to approximately c.5.9% of the overall delivery cost of a house, and c.7.6% of the total cost of a suburban 2-bed apartment. The cost of finance is just one part of the overall cost of the delivery of housing.

The Government is committed to lowering the cost of finance by reducing the risk in housing development through initiatives such as changes to the Planning Acts and the recently announced National Development Plan Review which commits funding of over c.€36bn for housing over the next five years.