NAMA to trial payment plan soon

THE National Asset Management Agency (NAMA) has defended its plans to introduce a deferred payment scheme which would insure buyers of NAMA-controlled property against the threat of negative equity for a five-year period.

It follows concerns voiced by Housing Minister, Willie Penrose, that NAMA could artificially inflate the market at a time when property prices appeared to be correcting themselves by placing thousands of homes on the market.

Under the proposed scheme, NAMA will waive up to 20% of the purchase price if the market value of the property falls over the following five years.

The initiative has sparked fresh concerns that the scheme will add further uncertainty to the property market where the number of sales has fallen dramatically over the past couple of years.

NAMA’s plans were also criticised yesterday by financial expert, Brendan Burgess who claimed the scheme represented “a very big mistake”.

“It is such a complicated scheme that it will be impossible to put a price on the market,” said Mr Burgess who predicted it would interfere in the normal mechanism for fixing house prices.

However, NAMA’s chief executive, Brendan McDonagh, said the agency was only linked to just over one-fifth of all unsold, newly built residential units around the country. Of these, he claimed approximately 80% were apartments or duplexes.

Speaking at a conference hosted by the Irish Council for Social Housing yesterday, Mr McDonagh said NAMA’s priority was to “monetise” the agency’s housing stock.

He predicted that the outlook for the residential property market remained “more clouded than for the commercial market”.

He said its performance was closely linked to the real economy and the overall outlook for employment, net pay and interest rates.

Mr McDonagh claimed the scheme would be launched on a trial basis for up to 750 units by early 2012 at the latest.

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