Crisis would be less acute if Nama was repurposed earlier

BELATED plans to repurpose Nama as a development agency only serve to illustrate the opportunity the Government missed three years ago.

It was patently clear back then the country was facing into a severe housing crisis.

Various plans were drawn up, including Construction 2020 and the Social Housing Strategy 2020, but these did nothing to alter Nama’s primary objective.

It remained focussed on getting the best financial return for the State as quickly as possible by selling off the impaired loans it bought following the financial crash.

So while social housing waiting lists surged, Nama was selling off massive portfolios of debt linked to residential properties and development land to investors and vulture funds.

This only worsened the housing crisis.

Had the agency been repurposed then rather than now, it is likely the housing shortage would be much less acute than it currently is.

The reason is simple. Since 2011 Nama debtors and receivers have sold sites with the potential to deliver some 50,043 homes. But for one reason or another very few new homes have been developed on these sites.

Just 1,116 housing units have been delivered to date, while 2,104 are currently under construction.

That means just 6.4pc of the site capacity sold by Nama has been developed.

One wonders how much of this land is being “sat on” by developers and funds holding out for a larger pay day as property prices rise.

Had Nama been given a mandate to retain control of the sites and support their development, the housing landscape might be very different now.

To put things in context, analysts Davy says a minimum of 35,000 units need to be built each year until 2021.

The sites Nama once controlled could have put a massive dent in this demand.

Nama says the development of some of the remaining sites may be inhibited by one or more constraints, such as commercial viability, infrastructure or lack of suitable planning permission.

But the agency would have had the contacts and the expertise to overcome most of these problems. And if viability was an issue, then it would have been worth the State taking a financial hit given the alternative that has since unfolded.

The Government could have sought the softening of EU requirements that Nama act in a purely commercial manner in recognition of the fact the housing market was extremely dysfunctional, if not effectively broken.

Nama has already proven it can deliver housing.

It was mandated by the Government in 2015 to deliver 20,000 homes by 2020. Some 5,321 units have already been completed, 4,441 of which are in the greater Dublin area, including Wicklow, Kildare and Meath. Another 507 are in Cork and 152 in Galway.

The remainder of the 20,000 either have planning permission or are in various stages of the planning process.

It is clear now that Nama should have been asked to deliver a whole lot more back in 2015. Instead it continued on its mission to sell off debt portfolios.

Since 2015, Namaappointed receivers and debtors sold land with potential for 37,444 housing

units, out of which just 3,181 units have been completed or are under construction.

Nama currently owns loans worth €4bn that are backed by property. Some 17pc of this portfolio is residential, while 21pc is classed as development land.

Some 85pc of Namacontrolled assets are in cities or the Dublin commuter belt, the very areas that are crying out for residential properties.

The agency also says it has sites at pre-planning or feasibility stages, with the capacity to develop more than 16,000 units.

If the Government missed an opportunity in not repurposing Nama earlier, local authorities may also have missed a trick.

Nama offered 6,941 residential properties to local authorities for social housing but only 2,378 had been transferred by the end of last year. The agency has been criticised for offering some properties, which had been vandalised, were holiday homes or were otherwise unsuitable. But it was still able to sell or let 1,754 of the rejected properties, which suggests there wasn’t much wrong with them.

That ship has now sailed and apart from the 10pc of new developments which must be set aside by law for social and affordable housing, Nama is unlikely to be making any further large-scale offerings to city and county councils.

It controls 4,000 other housing units, but these are already being rented out and the vacancy rate is close to zero.