Nama role in homes plan under threat
Housing minister Simon Coveney's plans to use Nama as part of his bid to address the housing crisis could be thrown into chaos following objections from five of the country's biggest builders.
The Sunday Independent has learned that officials from both the Department of Finance and Nama are currently engaging with the European Commission's competition directorate on foot of a complaint made by property developers Michael O'Flynn, Paddy McKillen, David Daly, New Generation Homes CEO Pat Crean and MKN Group director Brian McKeown.
Lawyers for the developers wrote to the commission last December, seeking an investigation into the State's provision of funding for property development through Nama. A determination on whether or not the agency is in breach of Europe's rules on state aid has yet to be reached.
Asked if Mr Coveney had appraised himself of the issues raised by Mr O'Flynn and his fellow developers with the European Commission and their potential implications, a spokesman for the Department of the Environment said: "The minister has been briefed by his officials on all areas pertaining to his remit."
The same spokesman said it was his understanding that the state aid complaint was "a matter for the Department of Finance".
In a statement, the Department of Finance said: "Nama and the Department of Finance are engaging with the European Commission regarding an allegation of state aid in relation to Nama's residential funding programme. As these engagements are ongoing, it would not be appropriate to comment further at this time."
Under the terms of its proposed €7.5bn development programme, Nama has pledged to deliver 20,000 new homes in Dublin and elsewhere and 3.8 million square feet of office space in Dublin's docklands.
Last week, the Government gave its approval for the creation of a special planning scheme for the Poolbeg peninsula. Up to 3,000 new homes are planned for the former Irish Glass Bottle site, which is under Nama's control.
As part of their complaint to the European Commission, the developers point to the financial advantage that Nama and the developers it supports will enjoy.
Based on an analysis conducted on their behalf by economist Jim Power, they estimate Nama's current cost of capital (borrowing) to be approximately 2.5pc, with Nama-supported developers paying an aggregate interest rate of around 6pc.
The complaint notes that "non-[Nama] supported developers" can expect to pay interest rates of 14pc to 15pc.
Central to their grievance is their claim that Nama has moved away from serving the objective for which it originally received approval, namely the "granting of State aid to the participating financial institutions" (banks).