Irish Forward Funding and Housing Delivery

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There are alternatives to Forward Sale agreements in Ireland, and they are called Forward Funding. You are able to use this alternative in the UK, Continental Europe, and The United States. The main factor of this is that the institutional investor acquires the site from the developer at commencement and agrees to fund the construction. The developer then makes a final payment that includes a profit margin on the completion of the project. This new option will have a unique role in the Irish market in the near future, but not many of these projects have been closed as of yet.Another note is that most institutional investors usually prefer to acquire the completed building through a forward purchase agreement rather than the option of using a forward fund. There are a number of reasons why Forward Funding transactions tend to have a slow finishing time. A Forward Fund transaction can reduce risk, while also getting rid of development flexibility and economic optionality.

Build-To-Rent developers have started to deliver well built, high quality apartments in Irish urban areas. Looking to the next two years, the scale of delivery will materially contribute to the overall residential accommodation delivery. Institutional investors who typically look to the long term, are motivated to run and maintain these developments in a quality way. It is crucial to the generation of apartment output that it is a well-functioning and broadly based debt funding marketplace. There has a been a great positive development in this regard and continued thoughtful evidenced based risk assessment will underpin longevity of this kind of lending.

The worldwide pandemic has also had an impact on housing delivery targets as much as it has affected other areas of the economy. However, the movement across the market of new housing supply over the past few years is finally started to bear fruit. There is real progress being made in increasing the supply of new homes, may they be public or private. There has been commentary from Irish media outlets about these new market trends. The thought is that the public sector can directly build social homes for less than the cost of purchasing them from private developers. The new claims have risen concerns as to whether people are achieving the best value for their money in their attempt to meet social housing needs. It is important to establish what the numbers represent, and to decipher what to do about the new market trends.

Written by John Spurrier, Mortgage Analyst for Online Application