Central Bank governor casts doubt on government proposals to ease lending rules for developers

Mr Makhlouf said banks are “well capitalised” and already have the capacity to lend more, adding that the “number one issue” in housing is planning.

It was reported last week that the Government wants banks to ease their lending rules for developers, which would reduce the amount of funding a builder has to pay upfront.

The Irish Independent revealed today that Taoiseach Micheál Martin and Finance Minister Paschal Donohoe will meet with the banks about reducing the level of equity and providing more funds.

The governor is due to meet Housing Minister James Browne in the next few weeks to discuss the plans.

Mr Makhlouf said it has been a long-scheduled meeting.

Asked about proposals to ease the bank’s lending rules, Mr Makhlouf said: “Firstly, in my view, it’s obviously up to the Government to decide what policies to put in place.

“My very strong advice to the Government is that there are many interventions that they have already made, and are making, in the housing market, my advice would be to take stock of all of those interventions, make sure they’re all mutually supportive of each other before introducing new ones. So that’s a basic piece of advice.

“Otherwise, we think that the banks are well capitalised, and they have the capacity to lend more, it’s their commercial judgment at the end of the day as to whether they want to do that, depending on their own risk appetite.

“That’s at this stage that’s all that reading. So I haven’t seen detailed government plans. I can’t really comment on speculation.”

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He went on to say he is “very conscious” of the many government housing policies already in place.

“My advice to people who want to introduce new ones, just to make sure that what you’ve got going, you know what it is achieving and you don’t do the wrong thing,” he said.

“I have said, and I wrote to the [housing] minister in my letter last month that I would prioritise investing in making sure that land is available for development, and that’s infrastructure is where I put a particular focus on.

“We published a report before Christmas in October or September, on specifically on housing, where we made clear, and I’m happy to repeat it now, that the number one issue on housing is not finance.

“The number one issue of housing is planning. It’s absolutely planning. This is not a unique situation in Ireland, but planning is a problem.

“Changing the law is one thing, making sure that the new law is implemented well is as important as law itself. So I would put all my energies, at whatever levels of government, and whatever levels in industry, to making sure that planning rules are being implemented in a way that supports the construction of housing.”

However, speaking later on Monday, Housing Minister James Browne said financing is a “real issue” when it comes to housing delivery within the private sector.

He added that when it comes to the building of large-scale apartment buildings, particularly in the capital, it was not happening because "financing is simply broken".

“As a government, we have to look at every measure possible that could be used to deliver that housing. The Government has stepped up to the mark. It is delivering at least €6.5bn in capital funding this year and I expect that will be exceeded,” he said.

“But we need a multiple of that from the private sector to deliver that housing and that includes financing that is needed to deliver that housing.

“Large-scale apartments in Dublin city centre, where we know financing is simply broken and it is not working. It is not delivering those apartments because if it was they would be being built.”