Home Building Finance Ireland doubled loan approvals in 2021

The state agency established to fund delivery of new homes more than doubled loan approvals to €835m in 2021.

It was up 111% on the €395m approved by the end of 2020.

Home Building Finance Ireland's latest performance update shows that funding had been approved for 3,729 homes in 71 developments in 18 counties by the end of last year.

Social housing projects account for almost a quarter of the new homes approved for funding.

HBFI was established to with a remit to provide funding at market rates for commercially viable residential developments.

It came about in response to the housing supply shortage that has seen supply falling well short of estimated demand.

While it is estimated that up to 35,000 units would need to be constructed each year to meet demand, the industry delivered around 20,000 units in each of the last two years - albeit against a challenging backdrop with lengthy lockdowns of sites, owing to Covid-19 restrictions.

Home Building Finance Ireland has now committed all of the €730m capital initially allocated to it when it started operations three years ago.

"We've great capacity to scale up in two ways," Dara Deering, chief executive of HBFI told Morning Ireland.

"One, where we recycle some of the loans that have paid us back because we started lending in 2019 and much of that money has come back and we'll continue to do that. But we also have the capacity to borrow additional funding from the market if needs be," she explained.

"The message for builders is if they have plans, we want to give certainty that we have sufficient capacity and that funding will not be an impediment to bring forward new supply."

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519 HBFI-funded units have been completed and sold, with a further 1,359 contracted for sale or sale agreed, the report shows.

Individual loan facilities range from €1m to €94m, with an average size of €12 million.

The loan terms range from 12 months to 44 months, with an average of 21 months.

Units funded by HBFI range from one-bed apartments, accounting for 14% of units, to five-bed houses - making up 1%.

The majority are three bed (37%) and two bed (32%) units aimed at the first-time buyer market.

"We are ready to add significant capacity to match demand if required," Ms Deering said.

She explained that the majority of builders and developers getting access to funding have a presence and experience in the Irish market.

"Sometimes it's developers who have been in the construction sector before and may have exited and want to come back in as builder or developer, so they may not have the financial experience but they have the building experience and we're happy to support them," she said.

On the prospect of HBFI broadening its remit given the success of the last year, Dara Deering said the Fund would continue to engage with the sector.

"If there are gaps in the market place where we could fill them, be it on a temporary basis, or if there are other gaps, we will make sure that finance is available and it's not a barrier to supply," she concluded.

One in four units go towards social housing

Almost half of the homes approved for funding by HBFI are intended for the owner-occupier market while a further 30% will be available on the private rental market.

23% of units will be available for social housing with a further 4% accounted for by Part V housing, where 10% of developments must go towards social and affordable housing.

Of the €835m approved, drawdowns have taken place in respect of facilities totalling €474m covering 35 developments with 2,228 units where construction is in progress or has completed.

HBFI typically expects a time lag of between three and six months between a loan being approved and its first drawdown.