State fund to back €30m social housing rental scheme
Irish Strategic Investment Fund had drawn fire for being slow to tackle housing crisis
New Bancroft in Tallaght: about a third of the apartments have been earmarked for social tenants and the rest will be let on the private market
The fund, set up to invest the €8 billion left from the State’s National Pension Reserve after the bank bailout in projects that will create jobs and boost economic activity, has drawn fire recently for being slow to help tackle the housing crisis.
It is understood that the fund has agreed to take just under 50 per cent in New Bancroft, a partnership that is paying more than €30 million for 131 apartments in Tallaght, west Dublin, which will be let to a mix of social and private tenants on long leases.
The investment will be the fund’s first in social and affordable housing. The State fund has put aside €500 million for residential projects and has pledged cash to Ardstone Homes and Activate Capital, which are backing new house-building projects in key centres in the State.
New Bancroft has earmarked about one-third of the apartments for social tenants and will let the rest on the private market, some of them possibly to people on the State’s housing-assistance payment.
The company will offer long leases – of at least six years, with the option to renew – to all residents. Its agent, MD Property Management, is likely to begin letting the properties later this month.
Willingness to invest
Mr Nowlan and Mr Kenny set up New Bancroft as they believe that Irish and international pension funds are willing to invest in the rental market here, particularly as returns from corporate and government bonds are low.
Both men are involved with the real-estate investment trust Hibernia Reit, a listed commercial and residential property company. Mr Nowlan is a director, and Mr Kenny is an adviser to the firm. Former Irish Life chief executive Kevin Murphy is chairman of New Bancroft.
Mr Nowlan has been looking for ways to lure institutional backers into the private rental market, particularly at the lower end, which investors have neglected in the past.
New Bancroft is treating Tallaght as a pilot project. If it proves successful the fund could expand, although it is more likely to buy finished homes rather than build them. It is not known if the Irish Strategic Investment Fund will invest further cash should the company grow.
The fund and various private-sector partners have so far invested €8.1 billion in 140 enterprises and projects. The State fund has put in €2.8 billion of its money and its co-investors were responsible for the remaining €5.3 billion.