Ireland To Become World's Biggest Property Owner

As the plans for the National Assets Management Agency (NAMA) are released, the first reactions suggest the toxic debt trouble-shooter is a €90 billion gamble that could see the Irish state becoming the worlds largest property owner.

NAMA will be responsible for buying up assets and properties which developers are failing to meet the payments on. This will be done through special powers to purchase development loans from banks at a significant discount.

However, the €90bn plan to rescue banks and kick-start the economy is being seen as a significant risk by many quarters, leading to a situation where the State will effectively become one of the biggest property owners in the world.

Under the proposals, the Government will take over 1,400 loans by the end of next June with the top 50 developers being be brought into NAMA before Christmas.

The agency will have the power to borrow up to €10bn to help complete projects it takes over, but only if that development further enhances their value. Developers who are in default will not be allowed to buy back their assets at a later stage. While builders will not automatically lose their primary homes if they cannot repay their loans.

Speaking following the publication of the NAMA Bill 2009, Fine Gael Deputy Leader & Finance Spokesman Richard Bruton TD said the Government was betting the country’s future on bankers.

"The legislation is asking taxpayers for an enormous blank cheque, asking you to trust the Government on this one. Huge risks are involved," he said.

He added: “The central concern with NAMA has been the worry that taxpayers will be asked to pay too much for these toxic loans. That concern has not been eased by this legislation."

Meanwhile, the bill has not been met with enthusiasm from the Labour party either.

The party's spokesperson on Education and Science, Ruairi Quinn, said: “My initial reaction on reading the draft NAMA Bill is that Fianna Fail is proposing to establish the biggest property company in the world and asking taxpayers to foot the bill and bear all the risk.

“This Bill will be one of the most important pieces of legislation ever to have come before Dáil Eireann. There will be enormous consequences for the taxpayer if the government get it wrong."

Mr Lenihan unveiled the proposed legislation yesterday, and signalled that it could take 30 years for NAMA to sort out toxic bank assets.

(DW/KMcA)