BoI approves €750m funding to build thousands of new homes
BANK of Ireland has approved more than €750m in development finance to fund the construction of thousands of new homes and student beds.
The bank, which has a €1.5bn rolling fund, has also increased the size of its development finance team to 16.
Business banking chief Michael Lauhoff said the fund could be widened further, depending on the appetite from small- and medium-sized developers.
“We’re doing facilities that can build two houses or up to 100 in various phases,” he said.
“There is a strong appetite out there, but you do need to see there is skin in the game. We will only fund shovel-ready sites, which are ready to be developed over the short to medium term. A site to be acquired to go into planning permission — that’s not within our appetite and we do see that as equity risk.”
Lauhoff said the approved finance will back the construction of 6,100 new homes, which includes around 770 social housing units.
He also said the funds will be used to build a further 2,000 student beds over the next 18 months.
Elsewhere, Lauhoff said that the bank has reported strong growth among the retail convenience sector for SME lending. He also said that he has been “frustrated” by the narrative of businesses not taking investment decisions due to Brexit.
“I’m not trying to gloss over it, Brexit is there and it’s having an impact in terms of SMEs’ investment appetite, but there is a huge amount of transactions going ahead with businesses investing in efficiency and capability,” he said.
“While some of them are Brexit-related, the vast majority of them are just good business decisions.”
Lauhoff said that there were businesses “listening to the narrative” and deciding against investment until after Britain leaves the EU.
“The risk from an Irish economy point of view is that lack of investment is going to result in a lack of competitiveness,” he said.
“Whatever happens with Brexit eventually there will be a new norm. But if you look at different sectors that could be impacted by Brexit, they’ve come through other huge challenges. I don’t believe anything that comes from Brexit will be remotely close to what the financial crisis caused.”
Lauhoff also praised the steps taken by small businesses to offset the potential effects of Brexit, describing them as “more agile”.