Monday 20 November 2017

The pros and cons of the sell-off plan

Why does NAMA want to start selling off properties now?

Developers have been reluctant to take huge losses by selling their properties. NAMA believes it is now time for them to be realistic -- the market price is what people are prepared to pay now, not what they will pay in the future.

It will look to sell lots of properties but hold on to others for several years in the hope that their value will increase.

Will I know that it is a NAMA property?

Not in every case.

It may be possible to guess in some cases because the identities of some of the developers in NAMA are publicly known.

But NAMA says that it won't be putting a "NAMA sign" on the house or office block.

The developer who owns the properties for sale will be expected to put the property on the market in their name.

What is the best-case scenario?

People will snap up the property bargains that NAMA puts on offer and a natural "floor" will develop -- the lowest prices possible in the market.

NAMA will still make a profit on the sales -- because it has been able to obtain such huge discounts on the value of the original loans -- and the taxpayer will benefit from any sale.

The increased receipts from property-based taxes will also help mend the huge hole in the exchequer finances.

What is the worst-case scenario?

The property market will be flooded with even more properties, potential buyers will not be able to get mortgages from the banks to buy them, and prices will fall even further.

The taxpayer will take an even bigger hit if foreign buyers swoop in and get valuable properties for rock- bottom prices.

Irish Independent

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