Through NAMA the Irish state (i.e. the Irish people) have control over key factors that can influence housing provision. However, just like we squandered and gave-away our natural gas and oil resources to multinationals, now we are handing our land and property assets to foreign vulture funds. These investors will then be able to profit into perpetuity from rising rents and property prices paid by the Irish people. It is a form of self-inflicted neo-colonialism.
We need to start looking at and using NAMA in a completely different way. It is a public development agency with the finance, land and expertise that should be directed toward playing a major role in addressing the unprecedented housing crisis. In order for this to be achieved a number of changes are required in relation to how NAMA operates.
It is not well known that the NAMA Act (2009) states that one of NAMA’s roles is ‘to contribute to the social and economic development of the state’ and that it ‘shall have regard to proper planning and sustainable development’. Furthermore, the Minister for Finance can direct NAMA as to what it should do.
So the Minister for Finance should use these powers to convert NAMA into an affordable homes development agency and change its priorities away from commercial imperatives to instead prioritise its social mandate. It is a political decision for NAMA to continue to maximise commercial returns and attract foreign investment.
The life time of NAMA should be extended indefinitely. It should be made explicit that winding up NAMA in the short term (i.e. repaying the debt immediately) is not its priority and that instead it should concentrate on using its lands and assets to develop affordable housing that will provide the repayment of the debt over a much longer time period.
Using its various assets (including 1,500 hectares of development land) Nama should be directed to provide 50,000 housing units over the next 8 years. €1bn of the €2bn currently earmarked for office development should be used instead for housing. Of the 50,000 units, 20,000 should be social housing units (currently it is only planned to provide 2000 at most – and these have to be purchased by local authorities from NAMA). 15,000 should be cost rental housing (this is rent below the market rent but available to a wider income cohorts than social housing such as low paid workers). And 15,000 should be affordable housing for purchase. It should be stipulated that these should be sold only to first time buyers purchasing for a home not as an investment property or to vulture funds.
Both cost rental and affordable housing can provide an element of a commercial return but much much lower than will be the case with NAMA and this return would go back into providing more social and affordable housing rather than as profit to speculative investment.
There are a number of ways that NAMA could deliver these social, cost-rental housing and affordable purchase housing. It could transfer the majority of NAMA’s residential development units and land into its social housing special purpose vehicle. NAMA could deliver the housing through financing or co-developing with housing associations or housing trusts set up by local authorities. It is worth contrasting the availability of finance to NAMA to develop high end offices and apartments with cash and finance starved local authorities who are forced to sell their land because of the lack of finance to develop it.
For example, Dublin City Council has been developing plans to develop 1,300 housing units on 30 hectares of its vacant land. Some of this is the land that housed the communities of O Devaney Gardens and St Michael’s Estate that were subsequently 'de-tenanted' or removed from the land as the social housing units were closed up a result of failed Public Private Partnerships in 2008 and subsequent austerity cuts to regeneration budgets.
It looks as if two thirds of the units on the 30 hectares will be private units for sale with the remainder a mix of social and cost rental. This is a huge loss (privatisation) of public land that should be used to provide predominantly social and cost rental housing. NAMA could play a role in financing local authorities like Dublin City Council to build social and affordable rental housing on this public land rather than losing this valuable public resource due to lack of finance.
Image 1: St Michael’s estate: Dublin City Council land about to be privatised
As it is a public agency NAMA could guarantee that the housing developments would be excellently planned, environmentally sustainable and model community developments.
NAMA could also be used to avoid further repossessions of family homes by taking over these loans and writing down debt, just as it did with the developers, and working with new schemes to keep people in their homes. It could also buy up the buy-to-lets in arrears and avoid evictions of tenants.
There will be 30,000 jobs in NAMA’s plans (with possibly up to 60,000 if this plan outlined here was implemented). NAMA should be directed to ensure construction workers employed on its developments are directly employed with proper pay and conditions and also provide for apprenticeships for young workers (particularly from disadvantaged areas). This would help in moving away from the trend in construction work for subcontracting and forcing workers to engage in forms of bogus self- employment – which is essentially precarious contract work at extremely low wages.
Also note that if NAMA makes a loss over its life time then the banks have to pay a levy to cover that loss so repaying the debt is not an issue as the banks which are returning to significant profits could cover that.
A number of Irish developers are challenging NAMA in Europe. They are claiming that NAMA will drive them out of business because of its access to low cost finance. But is this because they want a slice of the NAMA pie? They want to be in there – selected as developers by NAMA to deliver the housing at a commercial return. They are also possibly afraid of the potential of what NAMA could become – a public or not-for-profit housing agency that would provide affordable homes for rent and purchase. This would be anathema to Irish developers who want to deliver housing as a form of speculative property development that provides them with super profits.
The housing system and market in Ireland is dysfunctional and broken. Over the years of the Celtic Tiger (and before) housing in Ireland increasingly became a speculative asset for investors. Rather than using this opportunity to move housing in Ireland away from this model to be provided as a social need and human right that would benefit low and middle income households, NAMA and government policy is intensifying housing as a speculative market for foreign vulture funds. This will only make the housing crisis worse. Furthermore, it fails to take advantage of an opportunity to right some of the many injustices of the bailout and austerity period.
Dr Rory Hearne is a Senior Policy Analyst at TASC. You can follow him on twitter @RoryHearne