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New State lender to give cash to small developers to build homes for first-time buyers

The new state lender aims to deliver 7,500 homes within five years.

HOUSING MINISTER EOGHAN Murphy today announced the opening of a new state lender that aims to deliver 7,500 homes within five years.

Home Building Finance Ireland has been given €750 million to lend to small and medium size builders and developers, many of whom are facing difficulties in getting loans from the establishment banks.

Applications for more than €35 million or for less than 10 units will not be considered.

Sites must have planning permission or have a lodged planning application and the rates on offer are industry standard of between 5%-8%, according to Finance Minister Paschal Donohoe. 

Speaking at the launch today, Michael Broderick, HBFI Project Lead, explained the new State lender is focusing on the first-time buyers market. 

First-time buyers 

“I am not saying we would never fund a build-to-let but certainly that won’t be our target and won’t be our objective in the early days,” he said. 

The lender is working off a basic build cost of 200,000 per unit. However, Broderick said they are also working on the premise that the €750 million will be recycled twice within a five-year period.  

“We see project delivery with 24 months from inception and sale,” he said, adding that any money generated will be folded back into the project. Speaking about any limitations the lender might have, “capital is not one of them”, he said, adding that there is an option of drawing down more funds from the market. 

The finance minister said the reason this body is needed is because there are a number of market failures happening in the housing sector at the moment. 

HBFI AnnouncementLaunch3 The new State lender says it can deliver 7,500 homes in five years. Colm Mahady / Fennells Colm Mahady / Fennells / Fennells

From engagement with builders, Donohoe said while banks are lending, there is evidence they are only lending to a certain size development in urban centres, and smaller project builds are being left behind. He said that outside there is market opportunities for lending that is not currently being met. 

Banks not meeting housing need

In areas where this is apparent, where developers and builders are below a certain level, “lenders are not meeting the housing need,” said Donohoe. 

When asked why the State would take on a loan that the banks have deemed to risky, the finance ministers said a full analysis of the projects will be carried out, like any other lender, stating that they are not going to be “taking on risk that others will not”. 

Why has it taken so long for such a State lender to be established?  

Donohoe said the legislation had to be drafted and passed through the Houses of the Oireachtas, and due to the “busy” legislative schedule last year, it took time to get the new laws through. 

He said the government also had to ensure that it was not breaking any of the EU Commission rules on State aid. 

Murphy said the State lender is open for business today, adding: 

There are no easy solutions to the housing crisis but this targeted measure in the creation of HBFI will have a real and tangible impact in addressing one of the underlying problems in the market today.
It will build on the progress already made in boosting supply. It is a very significant step and restores another once broken part of our housing sector in a sustainable way.

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    Mute The Viking
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    Jul 24th 2017, 4:31 PM

    The True Heart of the fighting Irish. Well done Orla. Keep up the fight.

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    Mute Gareth Miskelly
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    Jul 24th 2017, 4:44 PM

    @The Viking: i wish i could like this comment more than once! Couldnt agree more!

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    Mute Mary Murphy
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    Jul 24th 2017, 5:00 PM

    After all this lovely young woman has done for CF wouldn’t you think the bloody health minister would sanction money for her operation. Ffs. Does he have to be led by the nose all the time

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    Mute Jed I. Knight
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    Jul 24th 2017, 6:11 PM

    @Mary Murphy: I’m sure you mean well, but had you taken the time to read any of this inspiring young lady’s blogs, social media posts or her Gofundme page you’d know it isn’t quite that simple.
    As she’s currently so ill she can’t travel back to Ireland, but while her only chance at survival is a lung transplant her health insurance will cover the cost, presumably when a suitable donor becomes available, however that’s not the full story.
    Many of the costs are not covered by insurance, and the first year post transplant are crucial, this after care is crucial – and expensive. Hence the request for funding. If you can spare it, please consider donating. Thank you for your time.

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    Mute Niall O Neill
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    Jul 24th 2017, 7:12 PM

    @Jed I. Knight: l think Mary Murphy was simply pointing out that the Minister for Health might underwrite the cost of Orla’s care. And while it might be exceptional, and lead to “what about me” complaints, l for one would only applaud the intervention. But it won’t happen for political reasons. Maybe a Dermot Desmond, Denis O’Brien, Michael O’Leary or J. P. McManus might anonymously do the right thing. If they even noticed.

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    Mute Mary Murphy
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    Jul 24th 2017, 7:52 PM

    @Jed I. Knight: I actually meant for them to pay the US hospital who is looking after her. Orla is a lady who’s done so much for CF and as such deserves the most that can be done. How do you know I didn’t donate????

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    Mute Jed I. Knight
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    Jul 24th 2017, 8:47 PM

    @Mary Murphy: As I already said, covering the cost of her transplant in America, which is likely to be substantial, isn’t up for debate, she clearly said her health insurance will cover this, thankfully.
    And you’re right, I don’t know if you did or didn’t donate, nor would I ask, it’s a personal issue. I politely asked if you could spare it to consider it.

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    Mute Maire
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    Jul 25th 2017, 10:30 AM

    @Jed I. Knight: Do CF patients get Health Ins.? Of coarse they should, but do they?

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    Mute Maire
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    Jul 25th 2017, 10:32 AM

    @Maire: Sorry, yes I see she has, thank God!

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    Mute Frank Dubogovik
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    Jul 24th 2017, 8:40 PM

    Great stuff….well done …hope it’s a fantastic success….she certainly deserves it!!!

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    Mute Paul Radburn
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    Jul 24th 2017, 6:19 PM

    Some good news for a change, well done.

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    Mute Andi Black
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    Jul 24th 2017, 8:17 PM

    Orla, I hope and pray that you will get the treatment that you need and deserve. Your government has let you down. But there is…… ‘Joe Duffy’ and Liveline, he might be able to help. Kindest regards. Andi!

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    Mute Paul Moran
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    Jul 25th 2017, 3:21 PM

    Now that the fundraising target has been reached, is there need of further donations?
    I was always a great admirer of Orla’s having read her articles in the Irish times, heard her interviews on radio and seen her on the Late Late.
    She is one courageous lady and I wish her success in her forthcoming operation and full health in the years to come. Paul Moran

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