The National Asset Management Agency has dismissed claims that its €5.6 billion residential building programme announced last week breaches EU state-aid rules.

This follows a complaint to the competition directorate of the European Commission (EC) on Friday by five leading Irish developers alleging Nama's plans to build 20,000 starter homes in Dublin and other areas over five years breaches EU state-aid rules.

“Nama is satisfied that, based on its own analysis, it believes there is no state aid and it looks forward to engaging with the EU commission on the matter,” said the agency.

Nama declined to comment on advice it received ahead of its announcement, which was attended by the Minister for Finance Michael Noonan and the Minister for Public Expenditure Brendan Howlin.

The EC on Tuesday confirmed it received a complaint from developers David Daly, Paddy McKillen, New Generation Homes, Michael O'Flynn and MKN Properties. He declined to comment on how long the commission might take to assess the complaint or if it might require Nama to pause whatever building work it plans in the coming months.

Developers

It is understood the commission wrote to the developers on Tuesday sayingit wishes to share the information with the Irish Government. As of Tuesday morning, Nama had not received notification from the commission of the complaint or seen the 26-page document filed by the developers.

The developers said few non-Nama builders and developers will be able to compete on level terms with Nama.

“When Nama is eventually wound up, the market for new houses is likely to descend into a state of crisis far more severe than the current situation, as a result of the lack of surviving property developers who are capable of producing the volume of housing required annually,” their complaint stated.

They claim Nama’s cost of finance is about 2.5 per cent, based on it effectively operating under a State guarantee, and that it then lends money to its debtors, as part of work-out agreements, at 5-6 per cent.

By contrast, developers not supported by Nama expect to pay 14-15 per cent for funding.

At its announcement last week, Nama said it could seek joint venture partners to de-risk the programme and could work with “non-Nama platforms”. But it said it could also fund the work itself. It will require €1.8 billion at peak.