(National Asset Management Agency)

John Martin

If there is one thing that can be learned from recent Irish political history, it is that when there is a crisis the State must intervene. But, as last month’s editorial pointed out, the resources of the State must be organised so that they are applied in a concentrated way on the specific problem.

Read more: The Lesson of NAMA

The great issue of the day is now the housing crisis; sixteen years ago it was the banking crisis. The two crises are not unrelated in that both relate to the building industry and the price of land.

In 2009 the Government set up the National Asset Management Agency (NAMA). Its task was to buy development land loans from the main Irish banks. The purpose of this was to eliminate uncertainty from the banking system. Nobody believed the banks themselves were capable of valuing the loans and therefore the extent of the banks’ insolvency was unknown.

By taking the loans off the different banks, the loans were consolidated in one institution and therefore the developers could not play one bank against the other. But, since the debtors were land developers, when they defaulted the land which was the security for the loans reverted to NAMA. So, the consolidation of debt led to vast swathes of land under the control of the State.

Between 2014 and 2024 NAMA had funded the delivery, or facilitated the construction of, 42,500 homes. Its brief was to turn the development loans into cash and therefore ultimately it had a limited lifespan. It is projected to make a 5.5 billion Euro surplus for the State.

By any reasonable standards, NAMA has been successful. However, there have been some carping articles dismissing NAMA’s achievements. In particular, an article in Phoenix magazine (16.5.25) suggested that the only reason NAMA made a profit was that it acquired the loans from the banks at below their value.

However, it was a pity that the accumulated experience that the State acquired in tackling one crisis could not have been used to solve the new crisis. The terms of reference for NAMA could have been changed to ensure that land under the control of NAMA would not be sold without considering its viability for residential development.

In other words NAMA could have been transformed into something like the Land Development Agency (LDA) except that, unlike the LDA, it would not have been starting from scratch. As in the case of previous crises, there needs to be a body with authority over all Departments of the State to clear the considerable obstacles to the implementation of policy.

Without such a body any attempt to deal with the Housing Crisis will be doomed to failure.