Wallace says land agency will be ‘crony capitalism at its finest’

The Government's Land Development Agency "promises to be crony capitalism at its finest", Independents4Change TD Mick Wallace has claimed.

Speaking in the Dáil, the Wexford TD described the planned operation of the agency as “nuts” and criticised the decision to appoint a former Nama official as chief executive. He said “it’s like getting the fox to mind the chickens”.

Mr Wallace said it was “soul destroying” to make such an appointment to the agency, which was created with an aim to tackle the housing shortage by building 150,000 houses over the next decade.

He claimed the agency promised to be “crony capitalism at its finest - a Nama mark II”.

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Mr Wallace, a persistent critic of Nama, which acquired bad loans from the banks to sell them off, highlighted a case linked to the agency. He said Avestus, an Irish asset management company, whose four directors had been in Nama, had decided to build residential homes.

He said they had directors’ loans worth €350 million and in 2012 Nama sold the loans to a company registered in Luxembourg for €26 million, a 92 per cent discount. Mr Wallace said that last week it emerged that the Luxembourg company and Avestus shared a director, in breach of the Nama Act. He said Avestus had received €25 million from the Irish Strategic Investment Fund to develop.

They leveraged “to buy their company back for peanuts and now we’re funding them to build”, he said.

‘This is nuts’

He told Taoiseach Leo Varadkar: "You want to do deals with developers Taoiseach to build on State lands while they sit on their own land. This is nuts."

Mr Wallace also claimed that the developer was looking to build for a profit of about €80,000 per unit. “Why would the Government want to put money in the developer’s hand? Why did Nama want to do it?”

He said the Taoiseach should give the local authorities the necessary skilled personnel “to hire builders, not developers, to build housing that’s 100 per cent affordable”.

Mr Wallace also claimed the Government’s housing policy was “spin rather than substance” which was “wedded to the policy that that market will fix” the housing crisis.

Mr Varadkar said the policy was not spin and that 14,000 homes had been built last year, double the previous year. In addition 5,000 people had been taken out of homelessness last year.

House prices had started to level off, rental price increases had gone from double digits to 1 per cent and rough sleeping was down 40 per cent, he said.

Mr Varadkar denied it was the Government’s belief the market would fix the issue as if this was the case, they would not be investing in 110,000 public homes.

He said the land agency would have a commercial mandate and would operate like semi-state firms like An Post or the ESB. The primary principle of the agency is not to make profit but to develop houses as a publicly owned service.