LAST WEEK Nama outlined how it intends to provide 20,000 ‘starter’ homes by 2020 and invest €1.9 billion in Dublin’s Docklands.

But these so-called ‘starter’ homes are more likely to be sold to international vulture funds who currently see Irish property as one of the ‘hottest’ investments in Europe. Nama actually has the land and finance to provide 50,000 homes over the next decade and could play a role in avoiding home repossessions.

The Minister for Finance should order name to move away from speculative office and residential development with global financial investors to focus instead on providing affordable housing.

Lets be clear. Nama’s 20,000 ‘starter homes’ will not be affordable. They are to be sold on the basis that they are “commercial venture… designed to maximise the return to Irish taxpayers on Nama’s secured assets”.

This follows Nama’s current (government supported and mandated) role to achieve a maximum commercial return to the State. But maximising ‘commercial return’ means selling to the highest bidder (which is likely to be wealthy foreign investors who can pay much higher prices than young Irish couples on average wages).

Source: Shutterstock/Mariusz Gwizdon

Sold to the highest bidder, not young families

In fact, Nama is actually arguing that prices need to rise further in order to attract more foreign investors. Frank Daly, Chairman of Nama has stated on the record that “many of those who are interested in buying development land in the Dublin area at the moment will have rate of return targets of 15%-20% and realistically those targets are unlikely to be met unless market prices rise significantly from current levels”.

But its not just Namathat is encouraging in the global investment and vulture funds to buy and up Irish housing, land and office development.

The Government gave tax breaks in 2012 to Irish-based real estate investment trusts (REITs) which include large international property investors. It also recently established the Ireland Strategic Investment Fund (with €7.6bn of our National Pension Reserve Fund) which is financing private housing developments in Ireland with global investors.

No doubt encouraged by all this promotion of the Irish property market, Lone Star, a €45bn US investment firm (owned by John Grayken, who became an Irish citizen in the late 1990s and is now the fourth richest person in Ireland) has bought (as a minority partner with Cairn Homes) a portfolio of Ulster Bank loans including 1,700 acres of prime residential land in Dublin.

The 2015 PriceWaterHouseCooper Global Real Estate Index highlighted that Dublin is gaining “heightened interest as a property investment centre, particularly from foreign investors”. It was ranked the second best European city for property investment in 2015. Foreign investment is driving up prices and also locking in the necessity for rising rents and prices into the future (to provide a return on this investment).

This is bad news for renters and those seeking to buy a home. It means housing will become even more unaffordable in Dublin and across the country. It is also bad news for the 50,000 homeowners in arrears facing repossession and the 30,000 private rented buy-to-lets in arrears. Because, as prices rise the banks and the vulture funds who have bought the loans covering these properties will try to evict home owners and private tenants to enable them sell and take advantage of rising prices.

This is why the consensus view that welcomes Nama selling off its assets and paying down its debt quicker than planned is wrong. The Irish taxpayer is actually losing multiple times.

We are losing billions from the sale of massively discounted assets, losing from the higher prices from foreign investment, and losing the potential to use these assets to provide a social return over the longer term through the provision of social and affordable housing.

And that is top of the austerity that was required, in part, to pay for the bank bailouts and the losses from the €70bn worth of toxic developers’ loans transferred from the banks into Nama. The homelessness crisis results from these austerity cuts to the housing budgets which resulted in the loss of 25,000 social housing units that would have otherwise have been built between 2009 and 2014.

Source: Sasko Lazarov/Photocall Ireland

The sale of Namaloans and assets must be suspended. At the moment it is providing super wealthy investors the opportunity for massive wealth accumulation. They gain from escalating rents and house prices as they purchase Nama land and assets at a discount and then sell them on for inflated prices.

The various property and vulture funds such who have bought or are in the process of buying up NAMA assets are making hundreds of millions in profits on their investments. For example, it was reported that Blackstone, the world’s biggest private equity firm, made in the region of €40 million profit from the sale of buildings it bought in Dublin’s south docklands from NAMA.

Similarly, it has been speculated that Cerberus, the US company that bought the controversial Project Eagle loans from Nama could make a few hundred million in profit on the transaction. These profits don’t come from thin air –they are being paid for by the Irish people through the on-going repayment of the bailout debt and escalating rising rents and house prices. And we wonder why inequality and the housing crisis are worsening?

But it doesn’t have to be like this. The 2009 Act that established Nama states that it has a mandate ‘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. Nama provides an historic opportunity for the state (i.e. the Irish people) to ensure adequate housing provision for all its citizens. But it appears that our land and property resource is being squandered and given away to global hedge funds just like with our oil and gas was given away to corporations.

Source: Shutterstock/Mariusz Gwizdon

The Minister for Finance should instead use his powers to convert Nama into an affordable homes development agency and change its priorities away from commercial imperatives to prioritise its social mandate.

The life time of Nama should be extended significantly to allow it to concentrate on using its lands and assets to develop affordable housing in the short to medium term that will provide the repayment of its 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 10 years. €1 billion of the €2 billion currently earmarked for office development should be used instead for housing.

20,000 should be social housing (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 affordable 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 and not as an investment property or to vulture funds.

Source: Sasko Lazarov/Photocall Ireland

It is not a ‘good thing’ - thetax payer is losing out

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.

As it is a public agency Nama could guarantee the mistakes with housing developments of the past were not repeated by ensuring its new developments are excellently planned, of proper build quality, and environmentally sustainable. It should also 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).

The housing system and market in Ireland is dysfunctional and broken. Over the years of the Celtic Tiger (and before) housing in Ireland became predominantly a speculative asset for investment.

Government (either this or the next one) should use the opportunity of Nama to fundamentally change our failed housing system and ensure housing is provided according to need and as a human right rather than a speculative market for foreign vulture funds.

Rory Hearne is a senior policy analyst with Tasc.