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HBFI is continuing to grow and evolve, offering a range of lending options to house builders and residential developers to support the delivery of new homes nationwide

Everyone is aware of the housing shortage in Ireland and the very real need for new homes to be built – and this is where Home Building Finance Ireland (HBFI) comes in. 

Established in 2019 to lend money to house builders and residential developers around the country for the delivery of new homes, its aim is to help ensure that a lack of available debt funding does not act as a barrier to increasing housing supply. 

Although a state body, HBFI was set up to operate on a commercial basis, similar to a standard lender. 

Assisting supply and delivery

Darragh Lennon, Head of Commercial at HBFI, says its offering is not designed to replace the main banks, rather it is to assist in delivering new supply to the market in locations or on projects where the main banks may not necessarily provide funding. 

“We try to fill that space by lending more than banks traditionally would – up to 80 percent of the cost of development – and by lending in all locations around the country. Once the development is commercially viable, we can lend to it, regardless of location,” explains Lennon.

HBFI has approved more than €1.4 billion in funding since inception, across 117 housing schemes.

“This funding is supporting the delivery of over 6,300 homes across 22 counties,” says Lennon. 

“We lend for all types of schemes. About half of what we have approved to date is for housing for private sale, 20 percent for the private rental market and about 30 percent for social or affordable homes.” 

Collaborative approach

Lennon’s role within HBFI is to help build awareness of how the organisation can help home builders with funding for developments through a programme of engagement.

The organisation works with both the private and state sectors because, he says it is, “hugely important that both work together in a collaborative way to deliver on the Government’s targets for new homes under Housing for All”.

Lennon is also tasked with understanding the market and identifying any emerging debt funding gaps that could act as a barrier to the house builders who are delivering new housing supply.

“We listen to the market and then try to respond with new products or new initiatives as we see gaps emerging,” he explains.

“We fund both large and small schemes from just five units to over 300. About 65 percent of the developments we are currently funding have 50 units or less, and the homes we are supporting typically have three bedrooms or fewer with over 80 percent in that category. 

“This is really a reflection of the type of homes that are being built across the country – we will fund any residential development from five units up in any location, once it is commercially viable.”

Criteria for finance

HBFI steps in where the main banks may be unable to support builders and developers. As with any type of funding, however, certain criteria must be met in order for a build to be considered suitable for finance. 

“We operate like any lender in that we have a set of broad criteria and there then tends to be further assessment on a case-by-case basis,” explains Lennon. 

“At a high level, HBFI has a minimum development size of five units. Typically, a developer will need to come up with 20 percent of the project cost, including the site cost, and quite often a lot of that 20 percent is by way of the value of the site. 

“We only lend to corporate entities, not directly to individuals, and our lending must be for the delivery of houses. Therefore, planning permission needs to be in place when we lend the money.

“The cost of finance is individual to each project, and it depends on a number of factors such as the experience of the house builder, the level of borrowing versus the cost of the project and what type of scheme it is – whether it is social/affordable or private etc. Typically, our lending margins range from five to eight percent but the best thing a developer can do is contact us to discuss their project.”

Agile and responsive

As the need for affordable and social housing shows no sign of abating, HBFI will continue to grow and adapt to cater for demand as it works with the industry to meet government targets and the need for new homes. 

“We are constantly listening to what those involved in home building are seeing in the market and try to engage with them and to respond as needed,” says Lennon.

“When we were first established, we had just a single product for housing developments and that has now been expanded to include five additional products - smaller developments, apartment developments, social housing, green developments, and a new product for larger house builders called Accelerate. 

“This is an example of how we try to be agile and responsive to what is happening in the market. 

“In the medium term, the targets in Housing for All are significant and there have been estimates done which indicate that between 2023 and 2030, somewhere in the region of €100 billion of debt funding will be needed to deliver those targets and that is before they are likely to get revised upwards, given our rising population. 

“So, in essence, there is and will remain a role for HBFI to play in the market alongside the banks and other lenders — and it will take a collective effort, both private and public, to deliver.”

Contacting HBFI

Lennon says that if anyone wants to contact HBFI, there are a number of ways to do so.
“You can express your interest through a very short form on our website, www.hbfi.ie, or call one of our Business Development Managers: David O’Doherty in Leinster on 086-8363280; David Fox in the West and North on 086-7962899; or Damien Quigley in Munster on 087-6382243. 

“The best thing to do is talk to us if you are unsure as we are always happy to speak to anyone and see if we can help.”

Interview by Arlene Harris