A total of €285 million in finance was approved to homebuilders last year by the State agency established to fund the delivery of new homes with €49 million advanced to borrowers.
The latest annual report of Home Building Finance Ireland (HBFI) shows the financial assistance provided to construction firms helped to support the development of 1,307 homes across 21 developments in 2020.
HBFI, which was established by the Government in late 2018 to address a shortfall in finance available for the construction of residential housing by providing finance at market rates to commercially viable developments, has now approved total funding of €395million to support 1,850 homes since its inception.
To date, it has supported a total of 38 developments across 17 counties, with the majority of projects located in Leinster, particularly Dublin and its commuter belt.
The average loan facility is €10million, although funding has ranged from €1 million to €94 million with an average of 48 homes per development.
Just over two-thirds of all funding approved by HBFI has been used for the development of private housing with 32 per cent allocated to fund social housing projects.
According to the latest figures, HBFI funding has supported a total of 1,162 homes already completed or under construction with 107 units already completed and sold.
The loan rate across all projects has ranged from 5 per cent to 9 per cent with an average of 6.98 per cent.
HBFI chairperson Marie Collins said it was uniquely positioned to respond to funding shocks to support the residential sector.
Ms Collins pointed out that HBFI had launched a range of new products during 2020, partly in direct response to the Covid-19 pandemic but also to extend its presence in the homebuilding sector.
“Uncertainty and restrictions continue to have a real impact on the residential construction sector and our focus is to continue to support viable residential developments that will deliver much needed new homes right across the country,” said Ms Collins.
HBFI chief executive, Dara Deering, said it was well on track to deliver its target of supporting the development of up to 7,500 homes over a five-year period.
Ms Deering said the HBFI’s fund for the year was increased from €200million to €300million due to the high levels of demand.
HBFI also recorded that borrowers had repaid €20million in loans last year.
‘Strong presence in market’
A review of HBFI which was published by the Minister for Finance Paschal Donohoe in May, found the agency had established itself as a strong presence in the residential market.
Mr Donohoe said HBFI had demonstrated its agility to respond to disruption to the residential development finance market in Ireland through the tailoring of its offering to areas where specific demand had emerged such as the Momentum Fund for larger prime developments which was launched last year following the onset of the Covid-19 pandemic.
The Momentum Fund provided funding for projects that would ordinarily have been funded by the mainstream lending institutions.
The Minister said the review had highlighted that access to finance remained an issue for homebuilders.
For that reason, Mr Donohoe said the continuation of HBFI remains necessary given prevailing market conditions and that it would continue to operate with a further review due in 2023.
The annual report shows that a third of the HBFI’s 27 staff, who are employed by the National Treasury Management Agency, are on salaries in excess of €100,000 with the chief executive earning a total of €312,000 including a basic salary of €250,000.HBFI said no performance related bonuses were paid to staff in relation to 2020.
