Retooling of Nama should not precede EU ruling, developer says
Plan to repurpose agency as housebuilder should be put on hold, Michael O’Flynn says
Michael O’Flynn’s company and other developers complained about Nama to Brussels after the agency said it would finance the construction of 20,000 homes. Photograph: Brenda Fitzsimons
Plans to turn the National Asset Management Agency into a Government-owned housebuilder should be put on hold until the European Commission has ruled on a complaint against the agency, one of the Republic’s biggest developers has said.
Taoiseach Leo Varadkar signalled this week the Government was considering turning the State body into a housing developer in a bid to tackle the Republic’s accommodation crisis.
However, builder Michael O’Flynn, head of O’Flynn Construction, pointed out on Friday that his company and others complained about Nama to Brussels after the agency said it would finance the construction of 20,000 homes.
He argued that any plans to broaden Nama’s role should wait until Europe rules on the complaint. The developers allege that allowing the agency to fund housebuilding is illegal state aid because the organisation can raise cash far more cheaply than the private sector players against which it is competing.
“There needs to be a determination by the commission,” Mr O’Flynn said, and this would then have to be considered by everyone concerned. His company, MKN Properties, Paddy McKillen and David Daly lodged the complaint in December 2015.
The fact that the commission is still investigating the claim after almost two years indicates that it takes it seriously. It is not known when Brussels will rule on the complaint. State aid is illegal under European Union law if it distorts normal commercial competition.
Builders say it is difficult to compete with Nama already as they have to pay higher interest rates than the agency when they borrow cash. They are also limited in the amounts that they can raise. One pointed out the banks will lend money only for developments of up to 50 apartments.
A spokesman for the Construction Industry Federation said the main barrier to housebuilding was rasing the money to finance it. “It’s not that builders don’t want to build, they would love to build, the problem is that they cannot get finance,” he said.
The federation’s spokesman added that once any proposal to turn Nama into a housing agency did not contravene EU state-aid rules, the industry could welcome the move. He added that if the Government took this step, it would take at least two years before it had any impact.
Some players fear that turning Nama into a housing agency could limit the supply of land for others. The organisation controls about 2,800 hectares that could be used to build new homes, some of which could be sold to private-sector construction companies.
“If that’s going to be used by Nama, does that mean that it is not going to put it on the market?” asked one developer.