Faster property deals to help NAMA slash debts
Published 14/12/2011 | 05:00
While NAMA appears to have had a major influence on Michael Noonan's Budget, it does not appear to have got its own way on everything.
Speculation suggests that NAMA's concerns about reform of the upward only rent reviews had a major impact in persuading the Minister Michael Noonan to abort Fine Gael promises to the retail rental lobby. IPD had warned that the reform would knock 20pc off the value of properties. With so few properties being bought by investors before the Budget it appears that vendors would not accept efforts by bidders to price this 20pc discount into any deals.
The budget waiver on capital gains tax and its limit to purchases made before the end of 2013 also appears to be designed to assist NAMA in acclerating property sales and meeting its target of slashing €7.5 billion off its €30 billion in debts by the end of 2013.
NAMA will also be helped to meet this target by the cut in stamp duty from 6pc to 2pc.
This will not alone apply to commercial property but also to farms and thus it may encourage farmers to acquire some of NAMA's vast portfolio of development land which, including construction sites, was valued at €8.2 billion. The stamp duty cut may also encourage some farmers to convert some Irish golf courses to farms and about 20 of these are owned by NAMA.
However NAMA's bid to accelerate sales of residential property in ghost estates suffered a setback. Ghost estates would have benefitted from the initial Budget plan to confine the CGT waiver on residential to those houses and flats which previously were acquired between 2005 and 2008. It would also have helped to attract buyers for those dwellings burdened with most debt. These might even have achieved premium prices compared to older properties which investors would have been deterred from buying in the absence of the waiver.
However the hike in the ordinary profits tax rate from 25pc to 30pc served to exacerbate what would have been discrimination against non-2005-2008 property.
One of those sales which stood to benefit significantly from the 2005-2008 clause would have been the Walford, on Shrewsbury Road, Ballsbridge, Dublin 4.
It was bought in 2005 for €58m. Prospective buyers were asked to submit tenders in the region of €13m just a few weeks before last week's Budget.
Reports suggest that Gayle Killilea, wife of developer Sean Dunne, has a beneficial interest in the property. A deal on its sale is awaited.
Only three days after the Budget the Government changed its mind and announced that the CGT waiver would apply to all residential property under the same terms as commercial property.