The gap between private housing supply and demand is unlikely to close for the next three to four years, the chief executive of the National Asset Management Agency (Nama) has predicted.
Brendan McDonagh also said recent discussion on the housing issue had been “overly-simplistic”, and that there was a “widespread” misunderstanding of the issue of land hoarding.
He was addressing the Public Accounts Committee (PAC) on the progress of Nama, which is on track to deliver €3.5 billion to the exchequer assuming economic and property market conditions remain "relatively benign" in the next few years.
In discussing the progress of the agency since its inception, Mr McDonagh recalled an early meeting with the troika in which a representative of the European Central Bank "walked out", angered by Nama's apparent reluctance to sell off its assets as quickly as possible.
Mr McDonagh said it had always been the role of the agency to realise the greatest return on property transactions for the Irish taxpayer, and while outlining its performance in doing so denied an assertion by Galway West Independent TD Catherine Connolly that they were "clapping yourselves on the back".
In his opening statement he said Nama’s overall contribution to the State would be about €4 billion, a “long way from the doomsday scenario” of losses amounting to €10 billion or more made by commentators in its infancy.
Today Nama plays a role in addressing the housing crisis – its chairman Frank Daly claimed that of all housing units made available since 2014, about a quarter or 10,500 homes had come as a result of its actions – and it appraised the committee of ongoing issues.
Mr McDonagh questioned whether there was a general understanding of the State’s limited room for manoeuvre when it came to funding private residential development. He said under State aid rules a public body could not fund the development of sites that are not commercially viable for private housing regardless of the scale of the problem.
In this regard, Mr McDonagh also challenged the broad understanding of land hoarding.
Reality
“The reality is that you cannot fund the development of a residential site if it is not commercially viable. Does that mean that we are supporting the ‘hoarding’ of land? We are not. I can assure you that as soon as a site becomes commercially viable there is no hesitation on our part to fund its development.”
Mr McDonagh said that while it would take up to four years to close the supply-demand gap on private homes, the issue of social and affordable housing was “more difficult” but “crucial if we are to have a more orderly market”.
Fianna Fáil TD for Meath West Shane Cassells said it was a disgrace that just over 2,700 housing units of about 7,000 offered by Nama were taken up by local authorities around the country.
Addressing questions on a potential conflict of interest relating to a particular sale, Mr McDonagh said his team had to re-examine documentation and would report back to the committee. “We are not rushing to any judgment,” he said.
Ahead of the meeting, The Irish Times reported on Nama's sale of €352 million in loans linked to property company Quinlan Private to the Luxembourg-based Clairvue-Nantes.
Its directors include Mark Donnelly, a former Quinlan employee. He had no direct interest in the loans that were sold by Nama.
