Coalition mulls finance options to boost housing supply

Developers complain of difficulties raising finance from banks for new schemes

 

The Government is exploring ways of providing finance to builders in a fresh attempt to boost the supply of homes in Dublin.

It is one of a series of measures discussed at a Cabinet sub-committee which heard there was little sign of construction activity on the ground in the capital, despite planning approval for up to 21,000 new homes.

Many developers complain that difficulties raising finance from Irish banks is a key obstacle blocking progress on new developments.

Ministers on Monday discussed ways of expanding the State’s pension reserve fund to provide up to 90 per cent of finance for developers for individual building projects where demand for housing is high.

While the idea of exchequer funding for builders is likely to be highly controversial in light of the property collapse, the Ireland Strategic Investment Fund is a sovereign wealth fund.

This means it would use a combination of money previously held in the national pension reserve, along with private investment, to provide up-front finance for builders.

Demand for housing

There have been discussions concerning provision of up to €500 million through this route, though some sources on Monday suggested more funds would be needed to make inroads into demand for housing.

The committee meeting was chaired by Taoiseach Enda Kenny and included Minister for Finance Michael Noonan, Minister for the Environment Alan Kelly and Minister of State for Housing Paudie Coffey.

Other ways of boosting the housing supply discussed by the subcommittee included:

Lowering local authority development levies, to make it cheaper for builders to start housing developments;

Expanding the role of the National Asset Management Agency to play a more central role in facilitating the construction of thousands of new houses and apartments;

Greater investment in infrastructure – such as water pipes, power lines and roads – to make priority-zoned lands usable for housing.

In the Dublin areas alone, it is estimated that up to €165 million in infrastructure could deliver up to 65,000 homes.