More than a quarter of sites earmarked for Nama homes are ‘not viable’ today
MORE than a quarter of the 20,000 homes set to be developed by Nama are not commercially viable at present and need extensive infrastructure to be built around them before they can be sold off.
Finance Minister Michael Noonan said the State bad bank would build 20,000 homes between now and 2020, in an effort to ease the housing crisis at a cost of up to €4.5bn. However, in a statement the agency said that of the homes it expects to build, only 14,000 will be on sites that are ready for immediate development.
Nama said that the remaining 6,000 will be located on sites that are “commercially marginal to develop at current sales prices but may become commercially viable through intensive asset management and planning work by Nama”.
“The provision of requisite infrastructure by the local authorities, Irish Water and Transport Infrastructure Ireland will also contribute to the commercial viability of some sites,” it added.
It is understood that the construction of water supply and access roads are among the key stumbling blocks for developing these sites. In their current state, building on those sites would not be viable.
Nama believes that the construction plan can be achieved without compromising its commitment to repay all of its senior debt by 2018 and its subordinated debt by 2020. Those dates have long been the critical targets for Nama, which has repeatedly maintained that it wanted to have achieved its original mandate by 2020.
The programme is expected to create 30,000 construction jobs, and Nama says it will work with both its existing debtors and builders which have not been involved with the agency up to now.
About 90pc of the homes are earmarked for Dublin and the surrounding counties and three-quarters of the units will be houses. Most of those will be aimed at first-time buyers.
Nama chief executive Brendan McDonagh said the plan “represented a major and interesting strategic challenge for the agency”.
The new plan will raise concerns that it may hurt Nama’s ability to make a profit for the State, but agency chairman Frank Daly maintained its targets were unaffected by the plan.
“We are satisfied, based on current market conditions, that this proposed residential delivery programme can be funded without compromising our commitment to redeem all of our senior debt by 2018 and our subordinated debt by March 2020 and without reducing our projected terminal surplus of €1.75bn,” he said.
“This initiative is designed to maximise the return that Nama can generate on behalf of taxpayers from funding the development sites under its control. It will represent a major commitment by Nama in terms of its social and economic contribution.
“Housing is badly needed, and we are delighted that we can play our part in providing it,” he added.
The agency defended itself against the suggestion that it would be better off selling the land it plans to build on in the open market. A Nama spokesman said the measures were to address “market failure” in the housing sector, and in particular around Dublin.
The construction sector reacted cautiously to the moves.
The Construction Industry Federation said the move was welcome but only equated to 4,000 houses per annum – barely a quarter of what it said was the broadly acknowledged national demand.
The buyer and the builder
Gary Purcell The first-time buyer, Co Wexford
THE search for a home that he likes and is within budget was not made easier in Budget 2016, according to first-time buyer Gary Purcell.
The clerical worker (34) has lived at home while working in administration in Wexford General Hospital, but said that moving out had crossed his mind over the last few years.
"I was always a home bird," he said. "It's only in the last three years I've started to get my act together."
Very little has been announced in the Budget that affected him, as a single house-hunter looking to buy his first property.
"There are some good parts but that will be more for the self-employed and families. They don't give much to a single person to buy a house on a low wage," he said.
He added that the reduction to the USC was welcome, but that he was disappointed that it hadn't been scrapped completely.
Gary originally aimed to be in his first home by next year, but says he may have to rethink this target.
He is still living at home with his family in order to put money aside for his eventual mortgage.
"I'd like to get a 30-year mortgage and have the time to pay it back. If I leave it too late, I'll have to get a 25-year mortgage," he added.
Gary has been looking for properties around the Foulksmills area of Co. Wexford. However, he has found it difficult to find a place that is within his budget of €125,000.
"Nothing really has jumped out at me. I've looked at about six houses," he said.
He has turned to properties in Wexford town, but dislikes that houses there were "stacked up together" in housing estates.
However, he remains confident that he will find a place soon and says he will be viewing a house that "ticks all of the boxes" this week.
"I'm meeting an estate agent on Friday, and another on Saturday," he said. "Fingers crossed something will take my fancy."
Lorcan Byrne The developer, Dublin
THE housing measures announced in this year's Budget did not do much to convince Lorcan Byrne, a builder and contractor based in Dublin.
"It seems to be, as everyone said, an election Budget," he said.
Lorcan has been involved in the family business, William Byrne & Co, for his entire working life. Although the company occasionally builds high-end residential properties, its main focus is on commercial units.
The company's biggest project at the moment is a series of new retail units and gym in Clarehall.
While Lorcan (36) has been building property for decades, he doesn't own his own home. He is currently renting in the Goatstown area of Dublin with his wife and two young children under the age of three. They are expecting another baby in April.
Lorcan says that he is lucky as he knows his own landlord very well, but added that he would have welcomed measures to ease the burden on those in the private rented sector. He would have particularly appreciated a move towards rent certainty.
"Right now, there's nothing there to ensure that the tenant will have a home," he said.
The announcement that Nama would build 20,000 new homes over the next few years was "laughable", according to Lorcan.
"I don't see it happening," he said. "They just can't develop and manage a portfolio of that size."
Even though Lorcan is eagerly awaiting the arrival of his third child, he won't be able to benefit from the new two weeks of paid paternal leave because he is self-employed.
"We are a family business, and you are on the phone 24 hours a day," he said. "I haven't taken a holiday in 18 months."