NAMA is working with State agencies and local housing bodies to deliver properties for social housing purposes. FELIX McKENNA explains.
NAMA’s overriding commercial objective is to obtain the best financial return for the State from the management of the loans that it has acquired and the property assets underlying these loans. The Agency is making significant progress by reference to this objective. In just over three years since its inception, NAMA has generated more than €13bn in cash flows, has approved development funding of over €1.8bn for its assets, is profitable and, critically, is on target to repay senior debt of €7.5bn by the end of this year and all of its senior debt of over €30bn by 2020.
Another objective for NAMA is to contribute to employment and economic recovery, and to the achievement of wider public policy objectives. NAMA is meeting this objective in a number of ways, including:
- supporting employment in construction and related sectors;
- helping to attract international investment into the Irish property market through initiatives such as vendor finance;
- working with agencies such as the IDA to identify suitable properties to meet the requirements of foreign direct investment; and,
- engaging proactively with Government departments, local authorities, State agencies and other bodies to identify lands and properties for public use.
Social housing is an important area for NAMA within the context of this wider set of objectives. Reflecting this, NAMA has identified more than 4,000 houses and apartments, controlled by Agency debtors and receivers, as being available and potentially suitable for social housing. Four thousand is a significant figure in the context of NAMA’s relatively limited exposure to residential property in Ireland, which accounts for about 10% of the total
NAMA portfolio and equates to approximately 14,000 completed houses and apartments. Of that 14,000, almost 10,000 are rented out, generating substantial recurring rental income, leaving around 4,000 properties unoccupied. Where these properties could be suitable for social housing, they have been identified to local authorities.
To understand the process, once NAMA has identified properties, the onus for determining their suitability for social housing rests with the local authorities, which assess demand by reference to their own housing and planning criteria. Where demand for residential property has been confirmed, NAMA facilitates negotiations between the owner of the property or the receiver, if one is in place, and the local authority or approved housing body (AHB) that is likely to acquire the property.
To date, local authorities have confirmed demand for over 1,750 of the properties identified by NAMA. Another 425 properties are currently being evaluated, bringing the total for which demand may ultimately be confirmed under this initiative to 2,175.
Of the properties for which demand has been confirmed, 296 have been delivered for social housing to date, with contract terms signed in respect of a further 111 properties. This brings the overall total number of residential properties completed and committed to social housing so far under the initiative to 407, across 19 developments in 10 counties. Approximately 400 more are in an advanced stage of negotiations between NAMA debtors or receivers and various AHBs, and are likely to be delivered for social housing over the coming months.
Of the 2,100 residential properties that are no longer under consideration, local authorities have advised that there is no actual demand in the identified locations for approximately 1,300 of the units, and the remaining 800 have been sold or privately let by their owners or receivers.
NAMA’s experience is that once demand has been confirmed for properties and contracts signed, there is no impediment to their early delivery for social housing by NAMA debtors and receivers.
However, issues such as compliance with the Multi-Unit Development legislation, planning compliance, site resolution and outstanding completion works often need to be addressed before the properties can be occupied.
As the outlined process indicates, NAMA does not control either the number of properties for which demand is confirmed under the initiative or the pace at which they are delivered for social housing – the Agency can only facilitate the sale or leasing of units for which demand has been identified and contracts entered into. However, where obstacles in the process have emerged, there has been no shortage of effort to work around them.
In order to streamline the process by which residential properties are delivered to the social housing sector, and facilitate a long-term leasing model in the absence of capital for housing development/purchase, NAMA established a special purpose vehicle, National Asset Residential Property Services (NARPS), to acquire properties directly from debtors and receivers for direct leasing to AHBs and local authorities. NARPS provides a secure and stable counter-party with whom AHBs and local authorities can enter into long-term contractual arrangements.
In conjunction with the Department of Environment, Community & Local Government, the Housing Agency and the Irish Council for Social Housing, NAMA has developed a standard form of 20-year lease, together with supporting documentation, which will be used for long-term leasing.
NAMA is working with the owners or the receivers, together with the Department, local authorities and AHBs, to ensure that as many of the identified properties as possible are delivered for social housing. Significant progress is being made and it is important that momentum is maintained with all of the stakeholders involved – the AHBs and the local authorities – to ensure effective decision making and facilitate efficient delivery, to a sector where there is increasing pressure to identify new housing supply solutions given the reduced capital funding and the fact that virtually no units are now being delivered under part V of the planning and development legislation.
Felix is Senior Asset Manager with NAMA,
and is a Past President of
the Society of Chartered Surveyors.