Is it realistic to expect state owned NAMA to become a giant developer of housing, replacing private sector housing developers?

Patslatt1

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Is it realistic to expect state owned NAMA to become a giant developer of housing, replacing private sector housing developers?

NAMA performed reasonably well in its workouts of distressed debts of banks going by its three billion estimated profit on conclusion of its deals, although there are doubts about valuations in sales prices obtained in many secretive sales, especially in Northern Ireland.

Given this financial workout track record, the government hopes the public will support its plan to turn NAMA into a giant developer of housing, a completely different business. It likely assumes projects proposed or endorsed by NAMA as a state agency will be better at navigating the red tape obstacle course of planning permissions and vexatious appeals than similar projects of private developers. But why should salaried NAMA civil servants be any more persuasive with planning departments than private developers and their top managers who are motivated to get things done by big potential profits and bonuses and have a track record in housing construction?

The main barriers to housing are caused by NIMBYS (not in my back yard) and Ireland's more extreme BANANA (build nothing anywhere near anything). For examples, see NIMBY, BANANA, CAVE and other acronyms. These selfish objectors are mostly home owners who influence council and general elections. To pander to them, councils and governments have created planning red tape to slow housing development. This isn't as bad as Cromwell's edict "To Hell or to Connacht", but it is socially very divisive now that average couples can no longer afford the average house prices in Dublin and many areas of surrounding counties.

There would be no need for statist NAMA if the government directly tackled the planning red tape by centralising planning permissions, though retaining local planning offices for local knowledge. Other measures could include selling off numerous government owned sites all over Dublin to take advantage of presently high development land prices; raising the height limits of apartments in architecturally mediocre areas of Dublin; imposing quotas of housing construction on councils with a poor housing track record;investing in water and sewerage to bring more development land on the market; and financing more housing association social housing projects which would likely be better managed than council housing.

Those who are fond of statist solutions will argue that NAMA could use its financial expertise as a banker to builders and developers. But in the long run the Irish banks and financial institutions should be better suited to that role assuming they have thoroughly been humbled by the mortgage losses in the crash. There is a risk that in the absence of a profit motive, NAMA might be tempted to play favourites with developers and builders with an inside track, whereas bank shareholders interested in profits would want the banks to finace the most profitable developments. If the banks are short of capital for housing finance, maybe the government should use the proceeds of NAMA asset sales to invest in bank shares or bonds which could be sold in public offerings over time.
 


FunkyBoogaloo

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NAMA is privately owned.

Private investors paid €51 million for a 51% shareholding. Anyone remember the infamous, "SPV"?...


It's how the State kept (and continues to keep) NAMA's debts off the national accounts.
 
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Gin Soaked

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They'll just outsource to existing developers and the contractual will be opaque at best.

Councils should contract directly on a "cost plus margin" basis. Houses should be sold at market rates with 20% retained for social housing provision.

No halting sites. No social housing over 4 beds. Councils absorb their own site fees for connection to services .

All plans vetted by PAC as alternative to planning process. Only engineering or pollution objections allowed. All plans need to provide for schools expansion as needed..

Mama opens the door to stroke policy
 

sic transit

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NAMA is privately owned.

Private investors paid €51 million for a 51% shareholding. Anyone remember the infamous, "SPV"?...


It's how the State kept (and continues to keep) NAMA's debts off the national accounts.
Not any more, The government set up an SPV of which 51% was privately owned in 2010.
They put in €51m and will get a return on that alone. But the nationalisation of most of the contributors took the Govt stake to 66% and necessitated the sale of some SPV chunks.

The original "owners", which we in turn mostly owned.

Irish Life Investment Managers, a part of PTSB
  • New Ireland Assurance, a part of BOI
  • Clients of Allied Irish Banks Investment Managers, a part of AIB
 

Patslatt1

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They'll just outsource to existing developers and the contractual will be opaque at best.

Councils should contract directly on a "cost plus margin" basis. Houses should be sold at market rates with 20% retained for social housing provision.

No halting sites. No social housing over 4 beds. Councils absorb their own site fees for connection to services .

All plans vetted by PAC as alternative to planning process. Only engineering or pollution objections allowed. All plans need to provide for schools expansion as needed..

Mama opens the door to stroke policy
State owned businesses which lack a private sector profit motive can be vulnerable to corruption as profits don't matter and cronyism prospers as international experience shows. This explains the trend to privatisation of businesses in formerly socialist countries.

Forcing councils to absorb site fees would help development to the extent a site was unprofitable for a builder to absorb fees. But on profitable sites, that could prevent development as councils balked at the costs.

Cost plus contracts for social housing have added unnecessarily to costs. Cost plus is used to finance uneconomic and silly council requirements to hire local labour given that highly fit and skilled building workers are not available in every locality. The builders don't have to worry about passing on high social housing costs to councils and taxpayers.
 
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Dan_Murphy

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They'll just outsource to existing developers and the contractual will be opaque at best.

Councils should contract directly on a "cost plus margin" basis. Houses should be sold at market rates with 20% retained for social housing provision.

No halting sites. No social housing over 4 beds. Councils absorb their own site fees for connection to services .

All plans vetted by PAC as alternative to planning process. Only engineering or pollution objections allowed. All plans need to provide for schools expansion as needed..

Mama opens the door to stroke policy

It'd be far more preferable for the council to rent all houses rather than sell them.

Right-to-buy houses are now just owned by private landlords

The houses would probably fall into landlord hands if they dont.
 

Armchair Activist

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State owned businesses which lack a private sector profit motive can be vulnerable to corruption as profits don't matter and cronyism prospers as international experience shows. This explains the trend to privatisation of businesses in formerly socialist countries.

Forcing councils to absorb site fees would help development to the extent a site was unprofitable for a builder to absorb fees. But on profitable sites, that could prevent development as councils balked at the costs.

Cost plus contracts for social housing have added unnecessarily to costs. Cost plus is used to finance uneconomic and silly council requirements to hire local labour given that highly fit and skilled building workers are not available in every locality. The builders don't have to worry about passing on high social housing costs to councils and taxpayers.
In this case I support high taxation but rent is by far the ideal. Houses would remain available for generations to come
 

GDPR

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State owned businesses which lack a private sector profit motive can be vulnerable to corruption as profits don't matter and cronyism prospers as international experience shows. This explains the trend to privatisation of businesses in formerly socialist countries.

Forcing councils to absorb site fees would help development to the extent a site was unprofitable for a builder to absorb fees. But on profitable sites, that could prevent development as councils balked at the costs.

Cost plus contracts for social housing have added unnecessarily to costs. Cost plus is used to finance uneconomic and silly council requirements to hire local labour given that highly fit and skilled building workers are not available in every locality. The builders don't have to worry about passing on high social housing costs to councils and taxpayers.
Councils should build or contract out the roads and surface water systems. Irish water the same with water and sewer. ESB networks, broadband providers and so on. All in a co-ordinated manner and using the same utility lines to minimise work and to their own specs. The idea being that it would be to a better standard from the start and minimize costly later fixes. How this is to be paid for and what ratio should also ensure that affordable houses/apartments is up front and centre.

Sent from my SM-A320FL using Tapatalk
 

yosef shompeter

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Could we say that the decision for the state to get involved in housebuilding is an admission that you can't leave everything up to "the Market". Especially if you want to remain in power?
So then can we say that the state should get involved in the construction of social housing ... hey! but this would mean constructing those large housing estates again.... unless it's done a little bit here, a little bit there (Which would be much more expensive).
Lots of things come in and out of fashion and I recall reading not so long ago about local authorities not wanting to create new housing estates as they ended up being social ghettoes or some such pejorative term.
But if you are sleeping under the bridge in winter, the aesthetic feeling of viewing four walls and a roof soon to be your own is something equivalent to viewing the Parthenon in Athens... And ya don't mind livin' beside the goujers either.

It does put things in a different light though. Let's say Leo pays Nama the money to construct so many 3-bed/4-bed semis.... let's say at a cost of €300,000 to €400,000 per house out of your hard-earned.... (Nota bene, you can't say it's the market that's providing the housing, it's the taxpayer)... How many Syrians and Africans and non-EU should be on the housing list for said houses?
 

Fr Peter McWhinger

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Could we say that the decision for the state to get involved in housebuilding is an admission that you can't leave everything up to "the Market". Especially if you want to remain in power?
So then can we say that the state should get involved in the construction of social housing ... hey! but this would mean constructing those large housing estates again.... unless it's done a little bit here, a little bit there (Which would be much more expensive).
Lots of things come in and out of fashion and I recall reading not so long ago about local authorities not wanting to create new housing estates as they ended up being social ghettoes or some such pejorative term.
But if you are sleeping under the bridge in winter, the aesthetic feeling of viewing four walls and a roof soon to be your own is something equivalent to viewing the Parthenon in Athens... And ya don't mind livin' beside the goujers either.

It does put things in a different light though. Let's say Leo pays Nama the money to construct so many 3-bed/4-bed semis.... let's say at a cost of €300,000 to €400,000 per house out of your hard-earned.... (Nota bene, you can't say it's the market that's providing the housing, it's the taxpayer)... How many Syrians and Africans and non-EU should be on the housing list for said houses?
NAMA building houses will be just like Bord Na Mona extracting energy: Low quality product with high prices and subsidies galore.
 

yosef shompeter

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NAMA building houses will be just like Bord Na Mona extracting energy: Low quality product with high prices and subsidies galore.
But if the object of it all is not to accumulate profit...
rather to win an election... and OK... keep the losses of funds within limits....
then objective achieved.
 

RadicalJacobin

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Yes, in fact NAMA should become the major vehicle for the constructing of houses in Ireland. They can ensure that necessary quality is maintained, make use of other state resources to help and create jobs, if only temporarily, across the island. Leaving everything to the market doesn't always improve, indeed it often worsens most things. Think about it this way, if one argues that the market always provides high-quality for better prices then why were places like Priory Hall and other places that breach regulations built and then sold for premium prices. Yep, you guessed it, to make a quick buck. The state should be building houses and allowing them to be rented, sold and the money should be re-invested in the state rather than given away to the pockets of private developers.
 

Patslatt1

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Yes, in fact NAMA should become the major vehicle for the constructing of houses in Ireland. They can ensure that necessary quality is maintained, make use of other state resources to help and create jobs, if only temporarily, across the island. Leaving everything to the market doesn't always improve, indeed it often worsens most things. Think about it this way, if one argues that the market always provides high-quality for better prices then why were places like Priory Hall and other places that breach regulations built and then sold for premium prices. Yep, you guessed it, to make a quick buck. The state should be building houses and allowing them to be rented, sold and the money should be re-invested in the state rather than given away to the pockets of private developers.
NAMA's state ownership is no guarantee of quality builds.The state abandoned any oligation to ensure quality control on housing building in the Celtic Tiger superboom.

The construction industry which experiences boom and bust cycles is very vulnerable to bankruptcies, so reliance on construction company guarantees of quality will disappoint many house owners. Some sort of private insurance on housing built for sale could be the answer.

In the case of social housing, the UK has extremely strict building standards, with government inspections at every stage of construction.
 

RadicalJacobin

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NAMA's state ownership is no guarantee of quality builds.The state abandoned any oligation to ensure quality control on housing building in the Celtic Tiger superboom.

The construction industry which experiences boom and bust cycles is very vulnerable to bankruptcies, so reliance on construction company guarantees of quality will disappoint many house owners. Some sort of private insurance on housing built for sale could be the answer.

In the case of social housing, the UK has extremely strict building standards, with government inspections at every stage of construction.
We should have extremely strict standards for all housing. Anyone who breaches those should face massive penalties so we don't end up with an Irish Grenfell Tower. I would personally be in favour on a lifetime ban on developing property for anyone who flagrantly ignores human life and safety in pursuit of profit. Legally I'm not sure it could work but its a disgrace how much rubbish was thrown up and sold to unsuspecting buyers, for the price of a small fortune too.
 

Patslatt1

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We should have extremely strict standards for all housing. Anyone who breaches those should face massive penalties so we don't end up with an Irish Grenfell Tower. I would personally be in favour on a lifetime ban on developing property for anyone who flagrantly ignores human life and safety in pursuit of profit. Legally I'm not sure it could work but its a disgrace how much rubbish was thrown up and sold to unsuspecting buyers, for the price of a small fortune too.
KNOW YOUR BUILDER
An experienced civil engineer who specialises in housing told me that he would know generally which housing builders were trustworthy but would not buy anything built in the Celtic Tiger boom from builders he didn't know or trust because of the lack of enforcement of standards then.
 

Niall996

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Greatest play of the shell game in Irish political/corporate history. There will be movies about this someday and people will gasp. There is probably a generation currently between eight and twelve and when they get to adulthood and look back at what happened and how their parents were so monumentally and so easily duped. Get the popcorn out, sit back and watch this one erupt. Hopefully I'll still be around to see it and in particulate how all the Lab, FG, SF and FF acolytes on here deal with the fallout.
 

Voluntary

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In general and proved all over the world: no business where State holds the majority stock giving politicians powers to make business decisions, can ever run as efficiently as privately held. The reason is simple: politicians do not put their own money in the business therefore they have no real desire to run it efficiently and be the best as it can be. When you put your own stake (money) in a business, you'll do anything to make it work, it's yours. If you get millions to manage with no real financial repercussion if it fails and with no real prospects of gains when it success, then this is never going to work well.
Add corruption, political goals (elections etc) not aligned with the business targets, boards and management elected on grounds of political sympathies rather than on experience grounds and then you have elections, change of government, new government get rid of the boards, elects it's own boards (again on political sympathies grounds), changes strategy to fit it's political agenda.

You can ask, if it's all so bad, why state owned companies bankrupt so rarely? Well, that's simple too, governments do not let State companies fail. When business goes bad they just pump taxpayer money into it and all is grant. But do we really want this?
 
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