Cheap loans for builders to speed up home supply
Property developers will be loaned money at low rates by the State to pay for roads, footpaths and sewerage in housing estates to speed up the building of houses.
The Government is also planning to refund development contributions to builders and is looking at bringing measures to provide certainty to the rental market and prevent large increases in rent.
The moves are part of a package aimed at increasing the supply of houses.
Policies intended to remove blockages in the system will be brought to Cabinet by Environment Minister Alan Kelly in the coming weeks.
The low-cost loan proposal will be initially restricted to the four local authorities in Dublin but could ultimately be extended to Cork and Galway.
Developers are currently complaining about not having the finance to pay for installing the infrastructure in estates.
Builders say they don't get the money back until all the houses are sold and banks charge punitive rates of interest.
The scheme will be aimed at developments which have planning permission and the sites are serviced.
NAMA estimates up to 15,000 additional houses can be built in the Greater Dublin Area in the next two years if the problem of finance is dealt with.
A new Strategic Housing Infrastructure Fund will be set up. The money won't be paid from central Exchequer funding, instead coming off balance sheet from the National Treasury Management Agency to be administered by the local authorities, Dublin City Council, Fingal, South Dublin and Dun Laoghaire county councils.
At this stage, between €150m and €200m is expected to be put into the fund to be drawn down.
The loans would have to be repaid in full, but the finance would be offered at far lower interest rates than what is being charged by banks.
"You have sites with planning, sometimes in built-up areas, but they don't have the necessary infrastructure or roads in place. This should sort that out," a senior Government source said.
In a related move, the Coalition is also looking at refunding part of development levies to builders if they finish estates on time and up to required standards.
The rewarding of developers for doing what is expected of them is likely to prove controversial.
To assuage fears for renters about their rents being dramatically increased, Mr Kelly is proposing what is known as 'rent certainty'.
Landlords would only be able to increase rents in certain bands and it could be linked to improvements carried out on the property.
Mr Kelly's plans are understood to have the support of the Taoiseach and Tánaiste's offices. But the Department of Finance has reservations so it's not across the line yet.
"Finance are being conservative. Kelly has made a proposal and a paper is going round. It has support at EMC level. It will be a considerable jolt to the supply of housing in Dublin," a source said.
Finance Minister Michael Noonan has invited 100 developers, banks and private equity companies to an event next month to find a way to kick-start the housing sector.
Mr Noonan wants to steer through the financing stalemate that has prevented construction of the €3.5bn worth of new homes required each year to tackle Ireland's housing crisis.
By gathering various stakeholders together under the same roof to the invite-only session, the Department of Finance hopes to enable the construction sector to access development finance.