New State Body to Provide Funding for Housing Development
Legislation to provide for a new State body has been commenced as of 5 December 2018. First announced as part of the budget in October 2017, it is one of the latest in a series of measures to address a shortage of funding in the supply of new housing.
Home Building Finance Ireland (“HBFI”) is in line for overall funding of €750 million from the Irish Strategic Investment Fund. An initial €20 million of equity capital is to be provided by the allotment of shares to the Minister for Finance, with the remainder to be by way of repayable loan.
The expectation is that HBFI will fund viable residential development in the State, which might otherwise not receive funding. To achieve this it must balance the requirements of competition law, with its overall aims to contribute to the economic and social development of the State and enhance the competitiveness of the economy of the State. HBFI must therefore lend on commercial terms, taking into account all of the risk factors relevant to lending, while, at the same time, having regard to government policy in relation to housing.
HBFI is intended as a temporary measure and will be kept under review. Under the legislation, the Minister for Finance must produce a report as soon as possible after 31 December 2020 and every subsequent two years, assessing whether HBFI should continue to operate.
HBFI will take the form of a DAC limited by shares and is expected to be established under the legislation early in 2019.
This document has been prepared by McCann FitzGerald LLP for general guidance only and should not be regarded as a substitute for professional advice. Such advice should always be taken before acting on any of the matters discussed.
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