Vulture funds who bought Nama sites must ‘build quickly’

Vulture funds that have bought development land from the National Asset Management Agency (Nama) should be forced to build houses on those sites quickly, according to a leading player in the property industry.

Over the last four years the agency has sold large portfolios of loans, whose security included development land, to mainly US-based private equity funds that began moving into the Republic as property values hit their lowest point following the recession.

Lawyer and property developer Noel Smyth says, in a paper on the housing crisis, that the Minister for Finance should instruct Nama not to sell "any housing or development land" without clear commitments from the buyers that they will build on it within a set period of time.

Irish taxpayer

“Any funds who have purchased lands in

Ireland

again should be encouraged, incentivised and forced in every way possible to ensure that these lands are utilised for the purpose for which they were zoned and on which substantial monies were advanced,” Mr Smyth says.

“The losses in relation to those lands have already been borne by the Irish taxpayer and any profits arising from the sale of those lands will be for the benefit of the funds who subsequently bought them at the bottom of the market.”

He also says that the Government should give councils emergency powers to create extra strategic development zones (SDZs), which are designed to help cut uncertainty and streamline planning, by setting out detailed schemes for specific areas.

Mr Smyth argues that “nimby-motivated” local interests disproportionately influence council planners and says that this is one of the root causes of the housing crisis.

The solicitor, who runs Fitzwilliam Real Estate Capital, also calls for a return to the old system in which councils built houses and then let them to tenants.

He suggests that local authorities should audit all of the land they have control over and on which new homes can be built.

They can then license construction companies to build houses on those sites. The builders can then transfer the homes back to the councils who can let them to tenants for fixed periods.

Rents fixed

Along with that, Smyth says that the State should consider introducing measures such as an entitlement to rent council houses for life or for parents to transfer them to children.

In a similar vein, Mr Smyth says that rents should be fixed and indexed to inflation, with reviews every three years, although he suggests that this market should be introduced over five years with the aid of tax breaks.

Finally, he says that VAT on houses should be cut or removed for a minimum period. “Conditions should be developed and imposed to ensure that these monies result in a reduction in amount of retail price of each property rather than the VAT simply being retained by the developer or land owner,” he says.

Alternatively, he proposes that a temporary VAT refund scheme on new homes could be used to form part of the first-time buyer deposit requirement.