€8bn fund for construction - but builders face barriers
A massive €8bn has been earmarked by both the Government and private sector for construction in an effort to tackle the growing housing crisis, the Irish Independent can reveal.
Vast amounts of money is needed to build a minimum of 80,000 private homes by the end of 2018, and 35,000 units promised under the Government's social housing strategy.
And Housing Minister Paudie Coffey has revealed private equity firms have proposed forming partnerships with Government and will invest €500m in social housing projects.
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This is on top of €150m committed by the European Investment Bank, which was matched by a further €150m from the Housing Finance Agency.
The State's asset management agency NAMA is understood to have the potential to lend up to €2.8bn to developers willing to build homes in key areas of Dublin and other regions around the country.
And under the Government's Social Housing Strategy €3.8bn was pledged to deliver 35,000 new social housing units.
The two main pillar banks - Bank of Ireland and AIB - have a combined €600m fund specifically for residential development. These funds are likely to increase if this capital is drawn down on the back of a rejuvenated property market.
Minister Coffey said the Government is currently examining proposals from private funders keen to invest in the social housing sector.
"It could be build or lease agreements, while others are involved with voluntary housing agencies. Up to €500m is being offered but no decision has been made yet," Mr Coffey told the Irish Independent.
As part of the Department of the Environment's drive to reduce social housing waiting lists a multi billion euro strategy was recently announced.
This was closely followed by the first substantial investment in Irish housing by the European Investment Bank. The 25-year loan deal will see hundreds of millions of euros given to housing agencies which will in turn put projects out to tender.
The cash pile will also help drive investment in private housing as 10pc of all developments must be earmarked for social housing. This will make projects more financially viable as units have effectively been pre-sold to the State.
Meanwhile, NAMA, the State's bad bank, has turned property lender and has already identified 60 projects it is ready to back.
The asset management agency will invest €1.8bn in Dublin's Dockland where 2,600 homes and commercial property will be built. NAMA has already funded 1,000 homes and 2,000 more are under construction. It promises to deliver 4,500 by the end of 2016.
The agency is also planning to lend to local authorities for infrastructure developments and it recently funded a new road in North Dublin.
Despite the huge amounts of money on the table for development, there is still concern in the sector about accessing the capital.
The Construction Industry Federation says its members are being stifled by "cumbersome" tendering processes and Central Bank rules on borrowing for development which prohibits banks lending more than 60pc of the cost of a project.
"For years the banks weren't lending. They've started lending again but only up to 60pc that means the other 40pc needs to be found elsewhere," a spokesman said.
Finance Minister Michael Noonan is hosting a private meeting with developers, banker and equity funds this Wednesday, where new funding models will be discussed. The 'networking session' will focus on moving away from banks being the main source of funding and seek to increase the use of private equity firms for construction projects.
Where is the money going to come from?
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The Residential Land Availability Survey map was created by drawing together zoning maps held by each local authority in the State.
Developed by the Department of the Environment, it sets out individual plots of land in towns, villages, cities and rural areas, and indicates the number of homes permitted on each site.
It took almost two years to develop, and provides planners and developers with an overview of the available land for housing.
It does not include land zoned for mixed-use development, which would generally include some housing provision. Nor does it include derelict sites.
The data is based on the situation as of March 31 last. Stage 1 land is considered not viable for development in the short-term because necessary services such as water are not in place. Stage 2 land has no major constraints. Not all the land has planning permission.