Madam, – One of the few benefits of the current crisis is the improvement in Irish competitiveness as falling private property rental and purchase costs lead to a reduction in salary pressures. Similar pressures on commercial property are reducing operating costs for businesses.
This imbalance between property supply and demand, if left to run its natural course, will have a long-term positive impact on our ability to compete internationally.
It is not in the national interest for the Government to intervene in the property market so as to push up prices.
Nama (or its equivalent) must focus on the establishment of a working banking system for our engine of economic growth: Irish SMEs.
By refusing to pay above present market value for distressed property and lands, the Government will have more options for the productive use of current and future taxpayers’ revenues.
– Yours, etc,
Madam, – Concerning the wisdom of Nama, I would sooner take the advice of "a small number of university lecturers in economics" than that of Pat McArdle, former economist at Ulster Bank, which is a creditor to Liam Carroll et al. A central problem in this debate is the complete lack of trust that I, and I suspect many others, have in those who contributed to this mess (Mr McArdle included). His assurance that "Nama is likely to make a profit" is insufficient collateral against which to mortgage Ireland's future. I will end with Mr McArdle's own view. You either believe the Minister or the academics.
– Yours, etc,
Madam, – I read with interest the archive pages of your edition of September 3rd, 1939 in the Weekend Review section (August 29th). As a result, I think I may have a solution to the problem of how to properly assess the real value of properties about to be transferred to Nama. The front page featured an advert for new three-bedroomed houses in Ennafort, Raheny, Dublin, available for £850. The inside pages included an advert for new Rudge bicycles, for £5-19s/6d. By my calculations, this equates to 142 bicycles per Ennafort house.
I’m currently thinking of buying a new bike under the cycle-to-work scheme: a top of the range Trek bike, which costs €900.
Does this mean (using the 1939 ratio) that three-bedroom houses in prime Dublin suburbs close to the city centre are worth €127,800? If so, where can I buy one?
– Yours, etc,
Madam, – The mantra for the past few months is that Nama is the only show in town. This is not true and there is a sense of unease among politicians, most recently some Green Party members, at the likely momentous implications for the taxpayer of implementing Nama.
While the Government certainly has to support the banks financially in the medium-term, it should not assume liability for unlocking the toxic assets as proposed by Nama, rather, this liability should remain where the contract is, between developers/ property owners and the banks. These are also the people with the relevant expertise to maximise the value of these assets eventually.
The banks, who gave these huge loans to developers/property owners should firstly pursue the recipients for recovery of these funds by calling in the guarantees given when these loans were taken out, most of which are personal.
The banks should immediately seek court orders freezing any deposits in the banks owned by the developers of the assets. The banks must then decide whether to proceed with the sale of assets, or, if not thought feasible, to hold these, and then seek a medium- term loan from the Government until a reasonable price can be achieved.
Developers/property owners should be prevented from transferring monies and healthy assets from their ownership until their liabilities relating to any toxic assets are met.
The banks would present Michael Somers and his team with a list of toxic assets for which they wanted financial support, together with a timeframe to achieve a realisation of these assets, and would be granted by the Government term loans to cover part of the costs of those assets.
With this approach the Government would have to lend huge sums of money in the medium-term to support the banks, but would not be picking up the liability for realising these assets, and letting the perpetrators, the banks, away free. Surely a more equitable solution.
– Yours, etc,