NAMA move to put hundreds of city houses on the market

Date Published: 23-May-2011

BY ENDA CUNNINGHAM

The National Asset Management Agency is planning to roll out a pilot scheme in Galway City later this year where it will offer mortgages on ‘seized’ housing stock, and protect buyers against negative equity.

It could potentially release hundreds of apartments and starter homes in the city onto the market – properties which had been held onto by developers in completed schemes. However, there are concerns the scheme could create a ‘sub-floor’ for property values.

NAMA is in ongoing talks with AIB and Bank of Ireland to provide mortgages for properties in Galway which have been ‘taken over’ by the bank, and where receivers have been appointed.

The so-called ‘toxic bank’ will offer to protect homebuyers against drops up to 20% in the value of their property.

According to the assets agency, the pilot scheme – which will also be rolled out in Dublin, Cork and Limerick – will be rolled out in the autumn and will require buyers to put down a 10% deposit.

Under the scheme, the properties will be offered for sale by NAMA or by developers whose loans have been transferred to the agency.

“What will happen is the market will adjust by whatever NAMA is prepared to insure by. What they’re trying to do is create a floor for the market, but this will create a sub-floor, where values are automatically at 80%.

“What I would rather see is the floor created by an active lending market within the banking sector, rather than NAMA seeking to prop it up, when they will actually achieve an opposite effect,” Alan Maxwell of Property Partners Maxwell, Heaslip & Leonard told the Sentinel.

The estate agent said the scheme would serve only as ‘market interference’ and compared it to the fluctuations caused by the Bacon Report in 1998, which recommended the abolition of tax breaks for residential property investors.

He added that while NAMA had taken control of development land in Galway, there are also potentially hundreds of apartments and first-time buyer properties which would have been held onto by developers as investments, as well as properties in incomplete developments.

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