Proposal seeks to give loans to small builders for land before they get permission to build houses

Under existing rules, small builders are only able to get finance for housing where they have secured a site and planning permission has been granted. File photo: Gareth Fuller/PA

Smaller builders will be able to access loans from the State to buy up land for housing before planning permission has been granted, under new laws proposed by the Government.

Tánaiste Simon Harris is expected to seek Cabinet approval this week for reforms to Home Building Finance Ireland (HBFI), a State-run lender to smaller developers.

Under existing rules, small builders are only able to get finance for housing where they have secured a site and planning permission has been granted.

However, Mr Harris is seeking to change the remit of the agency to allow it to provide finance to builders to buy land before planning permission has been received.

Mr Harris is expected to tell ministers the move to expand the agency will make it easier for small builders to purchase land, which is currently zoned for housing but does not have planning.

He will add that this can bring more zoned residential land into active development, while reducing the reliance on a builder’s own capital in a project’s early stages.

One Government source said this would not be the sole solution to the housing crisis but said it was one part of a wider response. They added it would only benefit smaller builders, with larger developers unable to access finance through the agency.

The proposal is expected to be approved by Cabinet on Wednesday, with a general scheme of the bill due to be published and sent for pre-legislative scrutiny.

It is understood that Mr Harris wants to get the legislation passed quickly, with one source suggesting it could be tagged on as an amendment to another piece of legislation.

It is also being brought in on the back of engagement with the housing industry through the Department of Finance’s Industry Responsiveness Forum.

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A recent report by the HBFI found that 90% of housebuilders deliver less than 50 houses per year. It also found that just 11 large developers, which represent 1% of the builders in the country, deliver more than 300 houses per year.

Further to this, 83 developers are delivering between 50 and 299 houses per year. The total value of all loans from HBFI stands at €3.776bn, as of the end of June.