De­vel­oper calls for Nama plan to be de­layed

Euro­pean Com­mis­sion’s rul­ing on com­plaint should come first, says Flynn

The Irish Times - - Home News - BARRY O’HALLORAN

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 to tackle the Repub­lic’s ac­com­mo­da­tion cri­sis.

How­ever, builder Michael O’Flynn, head of O’Flynn Con­struc­tion, pointed out yes­ter­day 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 house build­ing 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.

EU law

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 house build­ing 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.

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