What More Can NAMA Do to Ease the Housing Crisis?

Last week, in a well-publicised event, Anti-Austerity Alliance TD Ruth Coppinger, along with a group of housing and homelessness activists, occupied a house in a NAMA-funded housing estate currently under construction in Castleknock, north Dublin.

Their reason for doing so: to highlight the fact that NAMA, a state-owned agency, was involved in building 120 homes to sell on the open market, while 117 families from the nearby Blanchardstown area were living in emergency accommodation.

Coppinger called for the estate to be turned over to social housing. It wasn’t. A couple of days later, an injunction was sought and granted, and the group vacated the property.

Coppinger is not unique in positing the theory that property and land in NAMA’s portfolio should be handed over to provide social housing.

Many housing and homelessness activists share this opinion. A substantial number of the general public share it, and so do a number of Coppinger’s colleagues in the Dail.

Speaking in the Dail in July on the Urban Regeneration and Housing Bill 2015, TD Richard Boyd Barrett called for either NAMA’s entire mandate to be changed, or all its available land that could be used for social housing to be transferred to local authorities.

But is the theory that NAMA’s residential properties and its land could be handed over for social housing a practical one?

“If only NAMA would . . . “

For Karl Deeter, a mortgage adviser and financial expert, it’s not as straightforward as that.

“There’s a bit of a myth at this stage which is as follows: ‘If only NAMA would’ (insert idea here) ‘then we would’ (insert brilliant outcome here),” he says. “That kind of simple equation is a bit too stylised, and about as far away from reality.”

“Resolving housing is going to take a lot of different things, and of course NAMA is part of that, but they’re not the silver bullet. Nor should they be, really,” he says.

Talk of solving the housing crisis solely in terms of what NAMA should be doing is like trying to understand chess by looking at one square on the board, he says.

“Everyone automatically looks to NAMA, but the state and the local authorities are sitting on huge land banks as well that are underutilised and unused, that have been sitting there idle for decades in many cases.”

NAMA’s job is to get the maximum return it can for the taxpayer, he says. If it starts giving away its property for social housing, this maximum return is likely to be jeopardised.

Lorcan Sirr, lecturer in housing at Dublin Institute of Technology, is inclined to agree. “There’s no denying that NAMA has housing and assets that are of use to the state, but you’ve got to look at what the function of NAMA is more than what it has,” he says.

“NAMA wasn’t set up to be in the housing game,” he says. “It’s set up to get rid of the bad debts in the bank and recover whatever money it can for the state.”

It should be allowed to fulfill its remit and wind up as quickly as possible without getting into this quagmire, which it is not equipped to do, he says.

“And it’s all very well to say we have the quantity of houses, but it’s also important to look at where those houses are,” he says. “A lot of properties that they have mightn’t necessarily be suitable.”

He has a point. At the end of June of this year, NAMA had identified more than 6,500 residential properties on its books as potentially suitable for social housing (1,565 of these were later either sold or let).

Suitability and demand for 2,500 of these properties was confirmed by local authorities and 1,386 of these have already been delivered.

But 2,467 were deemed unsuitable by local authorities.

In the area of Dublin City Council, 828 properties were identified by NAMA, but only 400 of these were deemed suitable.

Units were deemed unsuitable which failed to meet sustainable planning and housing policies or were in locations with no demand, according to the Housing Agency.

Sirr raises another concern in relation to the concentration of social housing in one area.

“To solve the housing crisis with NAMA, I suspect what would happen is that social housing would get first priority. You really don’t want that,” he says.

“You don’t want hundreds and hundreds of social houses all put in together; you want to get a mixture of public and private houses.”

More Please

On the other side of the argument is Rory Hearne, lecturer in the Geography department at Maynooth University.

He believes NAMA is not living up to the social element enshrined in its mandate: to “contribute to the social and economic development of the State.”

For Hearne, NAMA’s special-purpose vehicle, which was set up as part of the new housing strategy to sell or lease its residential properties for social housing, could be broadened by transferring the majority of its residential units and land to be used for social and affordable housing.

NAMA plans to deliver 4,500 units by 2016 in the Greater Dublin area and has said it can deliver 18,000 more in conjunction with property developers by 2020.

It is a move in the right direction, given that the Housing Agency has said that Dublin needs 35,000 housing units by 2018, at a minimum.

But of the 22,500 units NAMA says it can deliver by 2020, only 2,250 will be social housing units, according to Hearne.

For Hearne, this just isn’t good enough. And it’s hard to disagree with him.

As of July, there were more than 21,500 applicants on the housing waiting list in Dublin, according to Dublin City Council.

In expanding NAMA’s special-purpose vehicle, the agency could provide 15,000 social units and 7,000 affordable housing units managed by housing associations by 2020, Hearne said via email.

“If this means NAMA doesn’t make a profit, it is important to highlight that those most affected will be the private (mainly international) investors,” he said.

In pushing for maximum returns, Hearne believes NAMA is working against the interests of those looking for social and affordable housing. The practice, by its very nature, is worsening the housing crisis as it increases property prices as well as rents, he said.

He cites as an example NAMA’s sale of its “Orange” portfolio last year to Irish Residential Properties for €211 million, which included 716 apartments in Dublin.

NAMA had advertised that the portfolio would provide a rental income of €10.6 million, he said. “Selling to investors with this expected rate of return places huge upward pressure on rents.”

Residential rents have certainly been shooting up in recent years.

Average rent prices increased 7.1 per cent in the 12 months from the second quarter of 2014, according to recent figures from the Private Residential Tenancies Board (PRTB).

Dublin rental rates had the strongest growth, increasing by over 9 percent in the same period.  Rents in the capital are now just 3.5 percent shy of peak rates in 2007.

A New Agency?

“NAMA are damned if they do and damned if they don’t,” says Lorcan Sirr. “If they sell, they’re accused of flooding the markets. If they don’t sell, they’re accused of missing the boat.”

If NAMA sells 500 apartments to an investment fund, they’re going to recommend high rental rates, he says. “That’s what they’re there to do. But at least they’re bringing it to market.”

The best way to tackle the housing crisis is to wrap NAMA up as quickly as possible, get it off the stage, and establish a housing-procurement agency that would take on, deliver, and manage both public and private housing, he says.

“We’ve a lot of experience in housing in the public sector; we don’t need to reinvent the wheel here,” he says.

The procurement agency could run in tandem with NAMA until it wraps up, and could even take over some housing assets from NAMA now, he says.

As of now, he says, the 500 or so housing agencies nationwide have about 5,000 units between them.

“There’s only about six of them that are big enough to start delivering hundreds of houses every year,” he says. “But we don’t need hundreds of houses, we need thousands if not tens of thousands.”

A housing-procurement agency would be able to deliver houses on this grander scale, he argues.

Karl Deeter has another suggestion.

“If social housing is social, why is it that only people who buy new homes tend to pay for it? Because that’s what Part V does,” he says.

He questions why we aren’t levying income to pay for social housing, and suggests earmarking a certain percent of the Universal Social Charge that would always go towards social housing.

“I’m not saying that would work, but if social housing is a social problem then everyone needs to contribute to it, and NAMA is not the solution on its own.”