Share this article:
AIB to help developers supply 5,000 homes
By Ruth Baily.
David Duffy of AIB has said it is actively working with six developers seeking to finance 5,000 homes to help alleviate the current supply shortage begin felt around the greater Dublin area. The bank is currently in discussion with Dublin City Council in relation to planning issues and densities in the capital.
This is very welcome news as access to finance is one of the areas causing the greatest difficulty in getting new building off the ground. However, the devil will be in the detail. Currently if a developer wishes to undertake a project they can only access 60% of the capital needed to fund the project. This means that they must finance the other 40% from their own resources. Given the economic difficulties we are emerging from any company who has survived does not have these kinds of reserves available. It is therefore imperative that banks are more flexible in their lending if projects are to proceed.
Nationally the ESRI has said that there is a demand for 25,000 homes per year with 10,000 of those in the Dublin region. If all of the projects AIB currently has under discussion come to fruition, that would only supply half the demand for one year for Dublin. It is therefore imperative that AIB and all banks deal with developers who can deliver projects which can plug the supply shortage, particularly in Dublin, on a sustained basis.
According to Mr Duffy the bank wants to advance lending at all stages, from funding the project through the developers to mortgage lending to its customers. This is important as developers need to know that banks will be lending to the end user, home buyers. If lending can be normalised, both to help sort out the supply shortage and to allow appropriate mortgage lending, then this can help to set the housing market on a more stable path.