Sinn Féin TD Imelda Munster has said that Home Building Finance Ireland (HBFI), in conjunction with the Department of Finance, made a strategic decision to redirect funds intended for small and medium home builders to institutional investors.

A member of the Oireachtas Public Accounts Committee, Munster was speaking following an engagement of the committee with HBFI, which was created in 2019 to provide investment to small and medium-sized builders where they were impeded due to a lack of available finance.

Teachta Munster said:

“€730 million was allocated for the purpose of providing finance to smaller and medium sized builders, with a maximum loan size of €35 million.

“HBFI then changed tack which resulted in the creation of the Momentum Fund, reallocating some €300 million of that to larger projects, in one case amounting to a loan of €94 million.

“Of significance is that HBFI did not seem to carry out due diligence as to if these projects had been turned down for commercial loans, or have any interest as to if these projects were the subject of forward purchase agreements, with significant elements being for the private rental sector – effectively resulting in these homes being bought en masse by cuckoo funds.

“HBFI confirmed today that the units this fund will deliver amount to:

• 841 private rental
• 85 social housing
• 92 owner-occupier 

“Those figures alone outline an absolutely abysmal return on investment.

“Even worse, however, the average projected rent for the private rental units will be:

• 1 Bed: €1,800
• 2 Bed: €2,100 
• 3 Bed: €3,100

“Ordinary families aspiring to be homeowners will never have the opportunity to even bid on the bulk of these units.

“Home Building Finance Ireland should be repurposed to focus on providing developers who deliver genuinely affordable homes with low-cost finance.”