STATE loan agency NAMA is working on a controversial plan to lend money directly into the residential and commercial property market in order to kickstart sales.
The agency has now effectively admitted that measures to revive the sector and force the banks to lend have failed.
NAMA, set up in November 2009, is now looking at lending to home buyers and professional investors in a fresh bid to restart the stalled property market.
NAMA's original backers had initially claimed NAMA would shake up the property market by providing a "wall of liquidity". However, the banks have deteriorated even further since its inception and are still not able to lend at the level that's required.
The proposed new plan would result in NAMA lending money for the purchase of properties in conjunction with AIB and Bank of Ireland, who ironically are now nervous about lending to buy property.
Sources made it clear, however, that NAMA was not becoming a bank as it would have no bank licence or customer deposits. Instead the agency would work with the banks to give out the loans to the customers with money coming from both NAMA and the banks to fund purchases.
While high-profile deals like the sale of an office block by Treasury Holdings to Google have happened on the instructions of NAMA, the international markets want to see more property deals done -- and soon.
Bank are insisting the buyers come up with deposits of up to 30pc of the property's value, a requirement few buyers are able to meet.
The chairman of NAMA, Frank Daly, revealed the plan yesterday when addressing the Society of Chartered Surveyors. It took many people in the property market by surprise because so far NAMA has been reluctant to deal with property buyers directly, hoping instead the banks would lend to them.
But in a sign of frustration with the slow progress of recovery, NAMA is now seeking to take additional action, with the Government rolling in behind the idea last night. NAMA has about €1bn of cash to use, which if added to money from the banks could trigger a large amount of fresh lending. Reacting last night the Department of Finance appeared to back the plan unveiled by Mr Daly.
"The Government's primary objective is to support economic growth," said a spokesman.
Peter Stafford, of the Society of Chartered Surveyors Ireland, said Nama was well-placed to promote lending for property.
"It's a good thing that Nama has recognised that liquidity is an issue in both the commercial and residential property markets, and the agency is well-placed to introduce measures to promote bank-lending to both these markets," Mr Stafford said.
But the move was criticised by leading UCD academic Professor Karl Whelan as something best left to conventional banks.
"I don't think NAMA should get involved in mortgages. That should be left to the regular banks," he said.