AIB launches new €100m social housing fund

Bank to provide loans on more attractive terms to developers of social housing

AIB chief executive officer Bernard Byrne:  fund will  “help accelerate the provision of much-needed social housing and a sustainable property sector.” Photograph: Gareth Chaney Collins

AIB chief executive officer Bernard Byrne: fund will “help accelerate the provision of much-needed social housing and a sustainable property sector.” Photograph: Gareth Chaney Collins

 

AIB has set aside a €100 million for a new social housing development fund, which it hopes will accelerate the supply of much-needed homes.

The fund will provide loans on more attractive terms to developers, who deliver newly built stock to approved housing bodies, a key plank of the Government’s Rebuilding Ireland strategy.

While an initial €100 million has been committed to the fund, AIB said it may review this amount should demand exceed expectations.

The bank said it was able to discount the value of the sale, providing 70 per cent of the costs to developers rather than the more usual 60-65 per cent available for private schemes. This lessens the developer equity required, Donall O’Shea, AIB’s head of real estate finance, said, and provides an opportunity for developers to raise an increased level of debt on more flexible terms.

The reduced equity requirement will also cut the capital costs of the project for the housing agency, he said.

The Department of Housing has promised to provide 26,000 new social housing units by the end of 2021, comprising newly built properties and vacant local authority housing refurbished. The Government’s plan comes at a time of acute housing shortages in urban centres across the State.

Languishing

There are currently just under 100,000 people languishing on social housing waiting lists while demand for private accommodation is estimated to exceed supply by at least 10,000.

AIB has already provided social housing body Tuath with a €15 million facility, which it used to purchase 190 completed housing units .

The bank’s real estate finance division is also funding the development of 3,500 housing units in the private sector and is supporting an affordable housing scheme in Ballymun in Dublin.

“As one of the leading suppliers of credit in the housing sector, AIB is delighted to provide this fund,” AIB chief executive Bernard Byrne said.

“We are an important stakeholder in the property industry and, with this new fund, we are providing more attractive terms to developers to help accelerate the provision of much-needed social housing and a sustainable property sector,” he said. The bank said it expected significant developer interest in the new fund.

The State’s largest social housing providers are currently classified as privately controlled non-market entities, which means their funding is off balance sheet. They provide about 30,000 of the State’s 160,000 social housing units, with the bulk of units coming from the four largest organisations: Clúid, Respond, Tuath and Oaklee.