The Government is set to force Nama to release valuable land banks for housing, even if it results in a financial loss to the taxpayer.
and taken over by the State during the banking crash will now be freed up to build new homes, as revealed by the Irish Independent on Saturday.
The State's bad bank will be told to release land for development, sometimes resulting in hefty loans being written down.
And the Irish Independent has also learned that an arm of the State's financial management agency is set to enter joint venture partnerships with developers to build housing.
The Ireland Strategic Investment Fund, which is designed to lend money on a commercial basis, would directly fund individual projects in return for a share of the profits.
The move comes amid concern about the lack of new homes coming on to the market, which is pushing prices up.
The lack of properties in Dublin could also force aspiring homeowners to buy in commuter towns badly served by public transport and schools, resulting in problems at a later date.
One option being considered is for Nama to release land to help reduce building costs by as much as €30,000 to €50,000 per unit, resulting in affordable homes being delivered.
The cost of building a house is almost twice as much as the bricks and mortar and is more than €250,000 when construction, development charges, water and road costs are taken in, the Society of Chartered Surveyors said. The figure excludes the cost of lending.
While the agency is expected to at least break even by the time it winds down before 2020, the Government may be prepared to forego profits on the sale of certain sites if it results in housing units being quickly delivered.
The Housing Agency says almost 80,000 new homes are needed between now and 2018, or almost 16,000 a year. Of these, some 38,000 are needed in Dublin and sites controlled by the bad bank could deliver up to 40pc of the required units.
The agency has already committed to delivering 4,500 by the end of 2016 across 62 sites in the Greater Dublin Area, but could deliver an additional 18,000 on other land banks. In addition, the agency also controls some 200 hectares of land which requires essential services - such as water and roads access - and which may be developed at a later stage.
"There is some good news around Dublin on planning permissions, (it's) not so great on commencements, but house building is taking off in the commuter belt. Everywhere needs housing, but if that were sustained without fixing Dublin, you're back to the transport and education problems that occurred in the Celtic Tiger," one source said.
"We think there is an ability in the Nama legislation that normal (commercial) rules can be set aside and it (Nama) can alleviate an emergency.
"The choice is to wait for the lands to appreciate so the full costs are recoverable. Nama could take a commercial hit to facilitate development."
The proposal comes after a senior Nama figure told a housing conference, organised by the National Economic and Social Council, that debt write-downs would have to be considered to free up land banks.
Portfolio manager Felix McKenna said there was a "real structural conundrum" regarding lowering land costs, "because a lot of the land remains heavily indebted".
"Those developers cannot be motivated to consume that land unless they repay the debt attached to it," he said.
"The natural inclination is to hold back until they are in a position to clear their personal indebtedness. The upshot is that there has to be some recognition of a debt write-off.
"In a Nama context, that liability falls straight back on to the taxpayer and it's not that much different for the banks. How can land be brought forward if the return to the developer does not cover the debt?"
Separately, Ulster Bank is preparing to sell loans covering around 17pc of all zoned housing land in Dublin on the market in the coming days.
Project Clear will involve three tranches of sales, with each having a "cornerstone asset". Land at Adamstown in Dublin will form one of those cornerstones, and is likely to fetch more than €300m.