Q&A: What is the National Asset Management Agency?

Nama, born in one crisis, will soon be given the powers to help fix another

Nama’s offices at the Treasury Building in Dublin. Photograph: Cyril Byrne / The Irish Times.

Nama’s offices at the Treasury Building in Dublin. Photograph: Cyril Byrne / The Irish Times.

 

What is the National Asset Management Agency (Nama)?

The Government set up Nama in 2009 to take over property loans from the Republic’s banks. The value of the properties against which the debts were secured had collapsed, threatening the banks’ solvency.

What does it do?

It paid €31.8 billion for the debts and began managing them, collecting repayments from the developers who had borrowed the money. In cases where the borrowers could not repay, it took over the properties themselves. When the market began to recover four years ago, it started to sell the loans to other investors, allowing it to get the State’s money back.

Is it already involved in providing housing?

The agency has been working with the Government to provide social housing. By the end of June this year it had identified almost 7,000 properties that it believed were suitable for this and delivered 2,398 of them to local authorities.

It has set up a special division, National Asset Residential Property Services, which takes ownership of homes in areas where there is an established demand and leases them to local authorities or housing associations. In a lot of these cases, these properties are unfinished, so it provides the developer or receiver with the cash to finish the work.

Recently the agency bought and finished 18 homes in an estate in Bettystown, Co Meath and leased them to the North and East Housing Association. It also bought and leased 23 apartments in Farranlea Road in Cork and leased them to the Co-operative Housing Association.

What else is it doing?

The agency has control of about 2,800 hectares of land that can be used for new homes. In 2015 it pledged to build 20,000 new houses by 2020, more than 90 per cent of them will be in Dublin and its surrounding counties, where demand is at its strongest, the rest will be outside the capital.

By the end of July it had finished 5,300 of these new homes. It was building, or had planning permission for, a further 9,200, while another 9,500 were in the planning system. At the same time, it was doing feasibility studies on sites with the capacity to hold 17,000 further homes.

While it originally committed to building 20,000 houses, the agency has signalled that it will go beyond that figure if necessary.

Along with that, it is working on commercial developments in partnership with several developers on 15 sites in Dublin’s docklands. While most of that work is focused on building offices, those plans also provide for about 2,000 apartments.

It is also planning to redevelop the site of the old Irish Glass factory in Ringsend in Dublin. This will involve a large number of homes and there is political pressure to include a significant proportion of social housing on this property.

Nama was originally set up as a lender, does it have the expertise needed to build homes?

It acquired this expertise as it went along. It now has a specialist housing division with staff who have a background in this area. Its head of residential delivery is John Collison.

Was Nama not meant to finish its work and be wound up?

Yes, but the law establishing the agency does not say when this should happen. When it published its annual report for 2016 recently, Nama’s chairman, Frank Daly, said that it would stay in business at least until the Irish Glass factory site was finished, which he estimated would take it beyond 2020.

Will the news that it is going to have a greater involvement in housing provision be welcomed?

The Government has faced calls from the opposition and elsewhere to turn Nama into a housing agency, so the news should be welcomed in some quarters. However, when it announced its original plans to build 20,000 new homes, a group of developers, including Michael O’Flynn of O’Flynn Capital and Pat Crean of Marlet made a formal complaint to the EU on the grounds that this was a form of illegal state aid. Other critics have accused it of “mission creep”, that is finding ways to expand its brief so it can keep going beyond the purpose for which it was originally established.

Does the Government’s announcement mean that the legislation establishing Nama will have to be changed?

This is not clear yet. The act requires that Nama get the best possible commercial result for the State and its main aim is to get back the €31.8 billion of taxpayers’ money that it originally used to buy the banks’ loans. Nama itself has not commented, but as it is a State agency, it will ultimately have to do what the Government asks. Any change to the law will have to be dealt with by the Oireachtas.