Minister for Finance announces extension to ISIF’s homes funding programme to support the delivery of new homes

Minister for Finance announces extension to ISIF’s homes funding programme to support the delivery of new homes

Published on 27 July 2023

The Minister for Finance, Michael McGrath TD, has today announced a significant extension to the Ireland Strategic Investment Fund (ISIF) funding programme to deliver new homes, with a new €400 million allocation for equity-based investments in new housing projects.

The new allocation will build on ISIF’s existing housing related commitments of €1.2 billion which has supported the delivery of 11,250 new homes thus far and is targeting the delivery of over 25,000 new homes by 2025 for owner-occupiers, renters, people who need social housing and students.

ISIF will use this money to target equity-based investments on a commercial basis, diversifying its portfolio and extending ISIF’s reach into the delivery of new homes in Ireland.

ISIF is making this new allocation to address emerging gaps in the capital landscape, in accordance with its statutory “double bottom line” mandate of investing in support of economic activity and employment in Ireland while delivering a commercial return.

The new allocation will result in ISIF making equity investments in new and existing housing focussed funds and housing delivery platforms, supporting Irish homebuilders by providing them with greater access to the commercial capital they need to build new homes at scale.

The announcement follows recommendations from the Housing for All Investment Workstream which identified an equity funding gap in the residential development finance market, with evidence to support further State involvement in the provision of equity for residential development.

Based on ISIF’s model of using its capital to act as a catalyst for attracting third-party co-investment, ISIF anticipates that the new allocation could unlock up to €1 billion of equity for Irish homebuilding through crowding in third party capital where possible, with co-investment by domestic and international partners.

Under this equity allocation, new housing investments by ISIF will be a blend of short-term and long-term initiatives that will support the development of new mass-market homes across a range of dwelling types and tenure.

In parallel, ISIF will continue to invest more broadly across the homebuilding sector with continued interventions based on market need for senior and mezzanine debt and other instruments as required.

This new allocation builds on ISIF’s previous approach to targeting sizeable initiatives. The Fund has previously set out plans to invest €1 billion over five years in climate action projects and, separately, a €500 million city-specific investment programme aimed at unlocking the economic potential of Ireland’s 5 regional cities – Cork, Galway, Limerick, Waterford and Kilkenny.

The Minister for Finance, Michael McGrath TD, said:

“I welcome ISIF’s new allocation which will provide a timely boost to the delivery of new homes in Ireland. Securing access to equity is key to unlocking access to senior debt for residential development. Therefore, this capital, together with construction debt financing, will result in a multiple of the Fund’s investment ultimately financing the delivery of new homes, for owner-occupiers, renters and people who need social housing. These investments will not only provide equity to support short-term housing delivery, but critically will also seek to structurally improve the long-term funding landscape for Irish homebuilding.”

The Director of ISIF, Nick Ashmore, said:

“ISIF has a strong track record in deploying capital in a targeted and commercial manner to address critical economic challenges and this extension of our housing delivery investments reflects how important this sector is to Irish society and the Irish economy.

We are building on our existing housing-related investments to address emerging gaps in the provision of capital for mass market delivery of homes, as identified by the Housing For All Investment Workstream, so that housebuilders can access flexible funding to make their plans a reality."