Home Building Finance Ireland, the new State lender for small and medium sized builders and developers, has opened for business today with an initial €750 million to fund new homes delivery.
The funding is being provided to HBFI by the Ireland Strategic Investment Fund.
HBFI lending will be on commercial market terms, with interest rates charged reflecting the market, the credit risk of each particular project, the quality of collateral, the creditworthiness of the borrower and their track record in the delivery of residential development projects.
HBFI said that indicative margins of 5% to 8% over Euribor will apply, with loan rates linked to level of risk. Loan duration will be up to five years and the maximum loan will be €35m for any single development. The minimum development size for any HBPI loan is 10 units, and sites must have planning permission or a lodged planning application.
HBFI official indicated it may fund refinancing of existing debt to facilitate development. Loans will be limited to up to 60% of site value, subject to HBFI’s overall Loan to Development Cost (LTC) cap of 80%.
In Association with
Michael Broderick, HBFI Project Lead, commented: “We are ready with an experienced team of specialist residential lending managers to lend to quality projects that can help address Ireland’s housing shortage.
“We are actively targeting the existing gap in the market that has made it hard for small and medium sized builders and developers and we plan to facilitate this market segment in growing substantially over the next five years and beyond.”
Pat Davitt, chief executive of the Institute of Professional Auctioneers & Valuers, cautioned that the loan terms and administrative detail must not be over burdensome.
“It’s imperative that HBFI would be in a position to offer loans with interest rates under 5% if it is to succeed in bringing SME builders of badly needed residential homes back into the market,” said Davitt.
“If it does it will mark an innovative and workable intervention that will bring back this type of builder who was the mainstay of Irish residential home building market in the past but who has been squeezed out by unviable interest rates from the pillar banks.
“If the terms are unrealistic and don’t take cognisance of market conditions for SME builders, then the loan scheme will be superfluous and only benefit those who don’t actually need it,” Davitt added.
Housing minister Eoghan Murphy said HBFI will have a real and tangible impact in addressing one of the underlying problems in the market. “It is a very significant step and restores another once broken part of our housing sector in a sustainable way,” the minister stated..
Applications can be submitted via the HBFI website. There is also an application helpline 01 238 4000.
Photo: Housing minister Eoghan Murphy (left) and finance minister Paschal Donohoe. (Pic: Fennell Photography)
