State loans to tackle the lack of new house building will not be rolled out until the end of this year despite being announced last October.

Funding of up to €750m will be made available to builders seeking to construct developments of more than 10 homes but who cannot get loans from the banks.

It is hoped that around 6,000 homes will be built in the coming years under the Home Building Finance Ireland (HBFI) scheme, first announced as part of the Budget.

Cabinet this week signed off on a bill needed to establish a new body that will lend, on commercial terms, to developers who may be experiencing difficulty obtaining adequate funding for commercially viable residential projects.

Finance Minister Paschal Donohoe said staff for the new organisation will be provided through the National Treasury Management Agency (NTMA) along the same lines as Nama.

“I am establishing HBFI as a temporary agency to address a shortage of finance for a shortage of homes,” said Mr Donohoe.

He said a progress report will be completed every two years, with the first review at the end of 2020.

While HBFI will not be able to direct the exact amount of social housing that is provided through these developments, Housing Minister Eoghan Murphy said they will have to follow the usual guidelines which stipulate that 10% of any development must go to social housing.

Mr Donohoe said: “HBFI will lend to any viable project that meets its requirements and will not be directly involved in designing the housing mix contained in the scheme it funds, because that work is led by our local authorities.

“The aim here is to provide a significant contribution to provide a significant number of additional homes.

“This lending will be on a commercial market equivalent terms and conditions but the exact terms and conditions will depend on the risk profile of each project, the quality of collateral being put forward, and the creditworthiness of the borrower.”

Sites must have full planning permission and will be required to provide at least 10 units to qualify for a HBFI loan.

“I aim to have this legislation enacted later on in the year and we will see HBFI commence lending by the end of 2018,” said Mr Donohoe.

The bill will now commence passage through the Houses of the Oireachtas.

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