Nama would provide cheap loans to developers under new plan

A recast Nama would provide cheap loans to developers to speed up the construction of houses and apartments under proposals being discussed by the Government.

The cost of builders accessing finance to fund development has been identified as a key problem by Ministers as they seek to tackle the housing crisis.

Taoiseach Leo Varadkar last month announced the Government is preparing to repurpose Nama to help drive housebuilding. Sources said the new Nama would be focused on "developing the land it holds and lending to non-Nama developers to build at commercial rates".

This could be done, according to the sources, by using the €1 billion in cash or equivalents Nama holds, raising its own funds on the markets to be used for loans, and by accessing the European Investment Bank.

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Nama could provide loans with interest rates of between 4-6 per cent, well below rates offered by banks and financiers, which it is claimed makes it less viable to build new homes.

Smaller builders

Minister for Housing Eoghan Murphy has acknowledged that smaller builders, in particular, are having problems accessing finance at competitive rates and said this issue would be addressed in next week's Budget.

Sources said it was unlikely any Nama announcements will be made on Budget day, but this could change.

Discussions are continuing between the departments of finance and housing about the future of the agency. They include transferring responsibility for Nama, or whatever the organisation will be called in future, from the Department of Finance to the Department of Housing. Such a move would require significant legislative change, which would need the support or acquiescence of Fianna Fáil to pass.

It is expected additional expenditure will be allocated for social housing provision in next week’s budget.

A paper on the cost of building was discussed at the Cabinet sub-committee on infrastructure last month. It said “access to lower cost finance can improve apartment viability” and suggested there is “scope for State/ISIF to make funds available for small-medium builders who can’t access cheap funds”.