AIB announces €100m social housing development fund
AIB has announced plans to set aside €100m in a social housing development fund.
The fund will assist experienced developers deliver newly built stock to the larger Approved Housing Bodies (AHBs) in the State, a key element of the Government’s Rebuilding Ireland plans.
AIB said that it will review the fund’s initial level of €100m pending demand.
"As one of the leading suppliers of credit in the housing sector, AIB is delighted to provide this fund," Bernard Byrne, chief executive of AIB, 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."
Under the terms of the fund, the bank - which was pushing to have Vat reduced to encourage developers to get back into the domestic housing market – will provide developers with an opportunity to raise an increased level of debt on more flexibility terms than available for private schemes, Donall O’Shea, AIB’s head of real estate finance said.
The bank said that it is able to discount the value of the sale, providing 70pc of its value as opposed to the more usual 60pc-65pc of costs available for private schemes. This lessens the developer equity required.
This initiative is being led by Derek O’Shea and Paul Kelly of AIB's Real Estate Finance group.
Mr O’Shea said that "significant" developer interest is expected.
AIB had previously committed to the social housing sector though the funding of Tuath, a social housing body. The bank provided the body with a €15m facility, that was used to purchase 190 completed houses throughout the country.
The bank is also funding the development of 3,500 housing units in the private sector, as well as supporting an affordable housing scheme in Ballymun, in Dublin.
A report from AIB earlier this month detailed a number of new initiatives that the bank has developed to help boost the housing supply.
Included in the report was the recommendation to cut the Vat rate for property developers to 9pc. A cut in the Vat rate to 9pc would cost the Exchequer around €240m.