NAMA and the empties - Sell, Hoard or Lease

This is an issue that has been touched on in several threads but which I think deserves more attention.

The loans of many of the major developers will shortly be taken over by NAMA. Now these developers have tens of thousands of vacant completed properties in mostly finished estates and NAMA will have a big say in what is to be done with them. It seems to me that they will have three main options.

1 Sell – This would seem to make the most sense if (and it’s a big if ) NAMAs goal is to keep the developers solvent and have the loans repaid. Many of these long vacant properties particularly those close to urban centres are still priced at a level at which they will not sell mainly because they are priced above what most first time buyers can afford to pay. If NAMA forced developers to reduce prices it would provide a lot of affordable housing for lower paid public and private sector workers and improve our general economic competitiveness.

2 Hoard – NAMA could continue to keep the unsold properties effectively off the market by keeping prices high. These properties would then deteriorate over time before being demolished in a few years. Existing residents will be ambivalent if this option is chosen. Not clear whether they would be more upset by living in a half empty estate or having others pay less than they did for their houses. If the goal is to slow falls is house prices and if VIs have much influence over the operation of NAMA this may happen.

3 Lease – The plan for the government to lease unsold houses for a period of ten years before they are returned to the developers. The properties will be maintained by local authorities while leased. Although this will undoubtedly happen it is not clear whether the govt currently has the funds to take all the sellable properties off the market by this mechanism.

There are also a lot of ghost estates in areas where people don’t want to live. A lot of properties in these places will probably be demolished eventually. My query above refers to vacant properties which would be bought if priced appropriately.