Government home building fund gave 90% of Momentum Fund to big developers

The €300 million Momentum Fund was set up in May 2020 at the height of the pandemic to “specifically help housebuilders commence large housing developments in prime locations in cases where funding may not have been available”, Ms Deering said. File Picture: Gareth Chaney/Collins

A key Government lending body set up to increase the supply of small scale housing developments nationally delivered 90% of one of its funds to large-scale developers and corporate investors.

Home Building Finance Ireland (HBFI) told the Public Accounts Committee that some €242 million of the €274 million it lent under its Momentum Fund had gone to such large-scale private concerns.

That figure, committee members suggested, would mean that instead of providing finance for smaller developers HBFI is instead fueling development which is in turn being bought up by corporate investors and cuckoo funds.

Chief executive of HBFI Dara Deering argued that it was necessary to prioritise those larger developers due to the Covid pandemic, which had led to an “ongoing problem of a lack of finance in the market”.

She acknowledged that of the 1,018 units constructed under the Momentum Fund, 841 had become rentals within investment funds, 92 went to private owner-occupiers, and just 85 went to social housing.

She further admitted that HBFI does not require proof from firms applying to it that they were unable to source funding from Ireland’s main banks, a fact which led to an accusation from Sinn Féin’s Imelda Munster that “no checks or balances” are in place.

“I am sure they were rubbing their hands that they got the funding so easily,” Ms Munster said. Ms Deering said that HBFI does not look for proof of such refusals as “we don’t believe that encourages the creation of supply”.

Average rents for the one-bed apartments constructed under the Momentum Fund were €1,800 per month for a one-bed, €2,100 for a two-bed, and €3,100 for a three-bed.

Sinn Féin TD Imelda Munster. Picture: Sam Boal / RollingNews.ie

The €300 million Momentum Fund was set up in May 2020 at the height of the pandemic to “specifically help housebuilders commence large housing developments in prime locations in cases where funding may not have been available”, Ms Deering said.

Committee vice-chair Catherine Murphy remarked that the provision of finance to large developers “was not the expectation for HBFI”. 

“This was supposed to be small or medium developers,” she said. “Why can’t these big developers source money in the market?”

Ms Deering, who acknowledged that her overall salary totalled €314,000 in 2020, said that five schemes had been funded under Momentum, three of which went to the private rental market with one sold to the private market.

“Based on our market analysis, if we had not funded those homes we are categorical that they would not have been built,” she said.

She said that the Momentum Fund is “not a case of either/or” in terms of funding both small and large developers.

“We were still sure we could fund small-sized developments,” she said adding that Momentum “didn’t compromise” HBFI’s ability to fund smaller concerns. Some 65% of what HBFI has funded “are on small or medium sites of less than 50 houses” she said.

Despite the body having an “initial expectation” that it would be supplying finance to smaller developers outside Dublin, 37% of the units it has funded to date are in the capital, Ms Deering said.

To date, HBFI has yet to fund a single housing development in six counties - Cavan, Longford, Roscommon, Sligo, Tipperary, and Limerick.