Irish Bill Would Let Small Builders Borrow for Land Before Planning

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Small-scale home-builders in Ireland would be able to take State loans before they hold planning permission for a site, under legislation due before the Cabinet this week.

Tánaiste and Minister for Finance Simon Harris will bring a memo to his Government colleagues on Wednesday on a new Bill that widens the scope of Home Building Finance Ireland (HBFI). The lender sits under the Department of Finance and was set up to support the construction of new homes.

Right now small builders can get HBFI finance only once planning permission is secured on a suitable site. Harris's proposals would let HBFI also lend for buying residentially zoned land before permission has been granted.

A fragmented market

A report commissioned by HBFI and completed last April found that the vast majority of home-building firms in Ireland deliver fewer than 50 homes a year. The KPMG report found the market highly fragmented: only 11 of the country's active house-builders consistently deliver more than 300 units a year, and a further 83 deliver between 50 and 299.

Harris is expected to tell the meeting that the Bill is designed to overcome one significant financial barrier facing small home-builders and to speed up the delivery of housing developments. The thinking behind the change is that small building companies will be more confident buying land that is already zoned for housing but has no planning permission yet.

The Government has a target of building 300,000 new homes in total by 2030. Harris has said the sector needs to scale substantially.

"That means supporting home builders to grow and evolve – from small to medium, and from medium to large," he said earlier this year.

Who borrows from HBFI

Most of HBFI's customers are small and medium house-builders, the lender has said. Firms seeking finance of €20 million or less received more than 80 per cent of its funding approvals.

Source: The Irish Times