Property investors will be able to buy residential units using Nama's mortgage insurance scheme, writes NEIL CALLANAN

PROPERTY investors will be allowed purchase residential units from Nama using the mortgage insurance scheme unveiled last week by the agency. Under the scheme, purchasers are protected against a fall of around 20 per cent in the property’s value over the first five years.

Speaking after the launch of the agency’s annual report, chief executive Brendan McDonagh told The Irish Times that they would not place any restrictions on the type of purchaser who could use the scheme but they would have to be approved by the pillar banks – AIB and Bank of Ireland – before they could go ahead with the purchase.

Nama is keen to get as many of the 12,000 residential properties it holds off its books as quickly as possible, although not all of the 12,000 properties are in Ireland. The agency has estimated that the scheme could attract 5,000 buyers, which would generate €135 million in Vat while restricting the agencys possible losses to €200 million.

Further details on the scheme will be released later this year and other banks have been asked to see if they are interested in using a similar scheme.

THE Department of Finance has received over 300 submissions on its proposals to curtail tax reliefs like section 23. Groups representing the industry and property owners as well as major estate agents responded to the Department’s request for reaction to its consultation paper on legacy tax reliefs by its deadline last Friday.

The Department’s paper, published at the end of June, was the first step in the Government’s plan to reduce, cap or abolish property tax reliefs and tax shelters which benefit very high income earners, promised in its programme for government. A spokesman said this week that it intends to complete the consultation before Budget 2012.

The Institute of Professional Auctioneers Valuers (IPAV) warned that thousands of middle-income taxpayers will face severe financial hardship if property tax reliefs are ended.

The SCSI said the removal of section 23 reliefs would jeopardise the long-term viability of many modest portfolios of three to four-properties, leading to distressed sales, losses to banks, the exchequer and local authorities and would cause disruption to an already fragile property market.

The Irish Property Owners Association (IPOA) said property owners with bank debt – about 90 per cent according its survey – could be forced into insolvency if the proposals go ahead.