€750m fund for property developers means state would bear almost entire risk of new, for-profit developments

The Workers’ Party has said that the €750 million Home Building Finance Ireland (HBFI) initiative announced yesterday by the government, is just a cash cow for developers which will not result in any more homes being built.

Gavin Mendel-Gleason, Dublin North West representative for the Workers’ Party, said:

“The government aims for the €750 million fund to enable the construction of about 6,000 homes through private developers. This is only marginally higher than the 5,000 homes the same amount of money could build directly.

“But instead of building homes which we own, which will be affordable, and which present no risk, the government has opted to speculate its cash on property developers who haven’t exactly covered themselves in glory in the past.”

Mendel-Gleason said the government’s portrayal of the fund as a purely commercial arrangement, and not a giveaway to developers, was misleading, saying:

“If banks aren’t willing to bear the risk of lending to developers, what makes the state so sure its a good bet? Its as if we are planning for another property crash, except this time instead of having to bail out property developers from the banks, we will already be the lender – and we will be the ones who get burned.

“Lending state money to private developers means we get all of the risk – and they get all of the profit.”

Mendel-Gleason concluded by saying that no amount of lending or subsidies to private developers would make housing affordable in Ireland:

“Throughout the Celtic Tiger, supply increased and increased, but prices never came down. We are setting off on the same road again – bankrolling developers who can and will continue to charge through the nose for the homes they build.

“The only solution is for the state to begin building public housing for all.”

ENDS

For information contact Gavin Mendel-Gleason (085-1368737)