Rory Hearne: Why is Nama not being used to address housing emergency?
Nama's headquarters in the Treasury Building Dublin. The state-owned agency has €1.2bn in funding reserves and 577 hectares of residential development land that could accommodate 80,000 homes.
If I told you a state-owned agency had the land and finance to build 80,000 homes, and owned thousands of apartments, but was selling it off to cuckoo fund investors, and in the private market at inflated prices. You would be rightfully annoyed and wonder why is that state agency not using its land and housing to provide social and affordable housing?
Well Nama, the National Asset Management Agency, is that state agency.
Nama, set up in the wake of the 2008 crash, to take the toxic loans and associated assets off the Irish banks, has paid down all its borrowings and is now a wholly debt-free state-owned agency with €1.2bn in funding reserves and 577 hectares of residential development land that could accommodate 80,000 homes. Nama has 1,300 units under construction and almost 7300 units with planning permission — that’s more housing than the Land Development Agency is likely to deliver for years.
Yet Nama is not being used to address the housing emergency. The Government could, if it so wished, direct Nama to deliver 8000 affordable homes each year (4000 affordable purchase and 4000 affordable cost rental would make a real difference). This would triple the supply of affordable housing in Housing For All. Who wouldn’t want Nama to do that?
But Nama, a state agency, is selling new housing it is building at prices at the top of the market. It is selling two and three-bedroom apartments in Dublin for €525,000 as starting prices. It is pushing for maximum prices and thus fuelling rising housing prices.
The 54 units in Finglas are advertised with an annual rental income of €1.1m, averaging €1,500 a month rent for one and two-bedroom units. Of the 54, 28 are vacant. NAMA advertises these can be let at ‘market rents’. So, at the height of a housing crisis, a state agency is leaving homes vacant, and selling them to investor funds to then rent them out at rates already beyond many people.
Another unpalatable aspect of what Nama is doing is that most of the land it has sold has not been built on, but just hoarded. Nama has already sold land that could have built around 81,000 homes. But only 6,800 units— just 8.4% of its potential — has been built on.
Nama is also hoarding land it retains. It states that it has sites that could provide 11,000 units but it is not building these homes as it does not deem it ‘commercially viable’.
Why is NAMA not being used as a source of affordable housing by the Government? Surely we should use every resource at our disposal?
The Chairman of NAMA, Brendan McDonagh, explained to the Public Accounts Committee in September, that the reason Nama is taking this approach with its land and property is it has a statutory objective, outlined in the Nama Act 2009, to obtain the “best achievable financial return for the state” and is obliged to “get the best price” in sales, and “can only finance developments that we expect will yield a profit… in compliance with state aid rules.”
However, the NAMA Act also states the agency has the objective to “contribute to the social and economic development of the State”.
Nama has taken a particular interpretation of the Act to justify its speculative real estate approach to maximising the commercial return of its assets, but why is Nama’s social mandate not prioritised? A commercial return could be provided over the long term, through affordable purchase and cost rental housing. The Minister for Finance has the power to decide what Nama does, as the Act enables the minister to “confer on Nama, by order… additional functions” and “give a direction in writing to Nama”.
In regard to EU state aid rules, the European Commission states that “in some circumstances, government interventions are necessary for a well-functioning and equitable economy”, and therefore the Treaty on the Functioning of the European Union (TFEU) allows “policy objectives for which State aid can be compatible”.
For example, during Covid, state subsidies to private companies is permitted. Article 107(3)(b) of the TFEU, allows for State aid “to remedy a serious disturbance in the economy of a Member State.”
The Act also states Nama should “avoid undue concentrations or distortions in the market for development land” and “shall have regard to proper planning and sustainable development”.
But the sale of its land and subsequent hoarding is contributing to distortions. Is Nama acting in contravention of its own legislation?
Nama appoints receivers to its residential properties. Are these receivers engaging in rent increases and evictions of tenants and, if so, does that mean that Nama, a state agency, is contributing to homelessness?
Forgive my level of rising anger on this, but how we are not enraged and scandalised by the perverse illogicality of what Nama is doing in the midst of an unprecedented housing emergency.
Using the Nama Act the Minister for Finance should direct Nama immediately to firstly, halt the sale of its land, and to build rapidly major amounts of affordable housing on it. Secondly, restrict the sale of existing and new build property only to individual home buyers and social housing providers, and at affordable prices. And thirdly, direct Nama receivers to leave tenants in situ for sale of properties (properties could be sold to housing associations for cost rental housing, thus retaining tenants). This can provide a commercial return (perhaps less than selling to investor funds, but a return nonetheless), as a more effective way of fulfilling NAMA’s social objective.
The minister should also direct Nama to make the following information public:
- A map and details of land that Nama holds (location, size, planning permission, commercial viability analysis);
- A list of its property portfolio (locations, vacant units);
- Who Nama is selling its property to, and for how much;
- Whether Nama receivers are evicting tenants.
The ongoing failure to use Nama’s land and property for affordable housing is a scandal of proportions greater than many of the historic scandals that have rocked this state. We cannot accept this continuing any longer.
