Up to 5,000 new buyers can escape equity trap
Published 29/07/2011 | 05:00
NAMA could ultimately sell up to 5,000 apartments under its new mortgage financing plan.
The loans agency chief executive Brendan McDonagh yesterday said that while NAMA would only get involved in lending with the Irish banks on a "pilot basis'' initially, the scheme could be extended in future years if it is proved a success.
NAMA is planning to sell several hundred apartments under its control to first-time buyers from October. It will help to lend money to this group along with AIB and Bank of Ireland.
The bank is going to offer the buyers the chance to avoid negative equity by waiving the repayment of the NAMA portion of the loan if the apartment declines in price.
If the value of the property rises, buyers will repay NAMA and the bank the normal way.
He said NAMA now owned or controlled 12,000 houses and apartments, with about one-third of these overseas.
He added that if the agency and the banks sold 5,000 apartments at €200,000 each, this would bring in €1bn of income, with the Government benefiting from strong VAT receipts.
"There are wider economic benefits,'' he added.
NAMA chairman Frank Daly said he was still waiting on the Department of Finance and the Department of the Environment to sign off on the scheme, but it will likely start in October.
Mr Daly said the agency did not like to forecast property trends, but insisted the scheme could "lift all boats''.
He added that while the agency would fund purchases of apartments in the autumn, he preferred not to see this as NAMA acting as a bank lender.
"We see it as a deferred payment scheme,'' he said.