Ireland’s €7.9bn sovereign wealth fund will be asked to step in and take on construction risk as the country’s government attempts to ramp up the size of its house-building programme.

The Ireland Strategic Investment Fund’s (ISIF) role was confirmed as Simon Coveney, minister for housing and planning, launched the government’s Action Plan for Housing, which seeks to build 47,000 new homes with the help of €5.3bn in state assistance.

The target of 47,000 new homes by 2021 expands the previous government’s ambition of 25,000 new homes by 2020, which it hoped at the time would also see social housing funded by pension investors.

Within the plan, the government said the ISIF was working on “competitive” financing arrangements to help develop the supporting infrastructure for housing developments.

“The proposed investment by ISIF would assume risks that conventional market financiers are unwilling or reluctant to finance, generally because of development risks, longer loan timescales or uncertainty around timing of repayments,” the plan said.

It added that any such investment would build on the ISIF’s established role within the property sector, which has seen it support a €500m joint venture to extend development loans to local property companies.

The document also said that, in light of the commercial returns that could be achieved by financing student housing, ISIF could increase its activity in the sector, benefiting the housing market as a whole.

“The primary housing-related benefit of ISIF’s investment in this sector is in the consequential freeing up of significant rental accommodation in the vicinity of third-level institutions that is currently occupied by students,” it added. 

The ISIF’s involvement in the housing programme was foreshadowed last week, when the chief executive of the National Treasury Management Agency, which houses the sovereign fund, said it was “working on initiatives that could help with housing supply”.