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Irish Times
14-06-2025
- Business
- Irish Times
Rent reforms will pull up the drawbridge on future renters
The Government came to power with an urgent mandate to resolve the housing crisis . It's had an inauspicious start. There were fewer than 6,000 new home completions in the first three months of the year, according to Department of Housing figures published last month. While that's up 2 per cent on the year, it leaves a mountain to climb for the Government to hit its target of growing output by more than a third to 41,000 this year – and ratcheting up incrementally to 60,000 in 2030. Recent developments suggest this administration is as short-sighted and flighty as every other in recent times when it comes to housing. Take the plan to set up a housing activation office – one of the better ideas to come from the Department of Housing of late – aimed at getting a crack team of officials to move quickly on addressing barriers to the delivery of critical infrastructure to boost housing development. READ MORE [ John McManus: Government had to choose tenants over investors Opens in new window ] Minister for Housing James Browne's planned appointment of National Asset Management Agency (Nama) chief executive Brendan McDonagh as housing tsar descended into political farce when the Government baulked at Opposition criticism that he would retain his Nama salary of some €430,000. McDonagh, a very credible figure whose bond to public service isn't questioned even by his sharpest critics, had little option but to pull his name on May 1st when Tánaiste Simon Harris let it be known that he was peeved about not being kept in the loop. Appearing on The Late Late Show the following evening, Harris told middle Ireland that he did not think such a salary was a fair one. An effective housing tsar would be worth multiples of the controversial figure. Either way, McDonagh remains an employee of the State on that package. He's due to return to the National Treasury Management Agency (NTMA) once Nama – to which he is seconded – is wound down at the end of this year. Further evidence of political expedience remaining the order of the day is to be found, too, in the fresh stab this week at rent reforms. Currently, rent increases in rent pressure zones (RPZ), which covers about half the land area of the State, cannot be greater than the rate of inflation or 2 per cent – whichever is lower. A planned new nationwide control system – set to fully kick in from March 2026 – would also see rent increases for tenancies capped in most cases by inflation or a maximum cap of 2 per cent. However, landlords would be able to reset rents at the going market rate when a tenant leaves. Smaller landlords with three or fewer units will have to offer rolling six-year tenancies, while large ones will not be able to evict a tenant who has complied with their obligations except in very limited circumstances. [ Rent changes: How will tenants be impacted by the plans for Ireland's rental market? Opens in new window ] Rent control for new apartments constructed following enactment of the legislation would be linked to inflation. This, the Government said, should 'provide certainty, clarity, and encourage investment'. If only. There's a body of academic studies that point to rent controls in general affecting construction. Konstantin Kholodilin, a senior researcher with the German Institute for Economic Research in Berlin, last year reviewed 122 empirical published studies on rent controls internationally, spanning 1967-2023. Two-thirds of those studies that assessed the impact of rent caps on new residential development found they depressed construction, he said. Irish private-rental-sector construction was booming during the phase of RPZ rent controls between 2016 and mid-2021. But that was at a time when increases were limited to 4 per cent and interest rates globally were at ultra-low levels. Since then we have seen the maximum rent cap cut by half, construction costs spiral, and global interest rates spike (though they have since come off their highs). Construction in the private rental sector has all but evaporated. Although Approved Housing Bodies and the Land Development Agency have stepped in to address part of the gap in apartment building, they are focused on social and affordable accommodation. Construction and finance industry figures say uncertainty caused by ever-shifting housing policy is more off-putting for investors than individual tweaks in themselves. With the latest rules delayed until next March, can investors willing to consider new schemes even commit before then? Add in at least another three years before any new supply comes on stream, and you're talking about the end of the decade at the earliest for those brave enough to deliver. There is nothing in the plan that would curtail an ongoing trend of small landlords exiting the market, further tightening supply. Sherry FitzGerald, the largest estate agent in the country, estimates that landlords fleeing the rental market accounted for 30 per cent of all home sales in the first quarter of the year. Allowing owners new builds to link rents to inflation – a volatile index – compounds uncertainty for investors. Consumer price inflation is running at 1.7 per cent. The incoming measures may serve existing tenants well, but effectively pull up the drawbridge on future renters. People are likely to stay put for longer. This, along with a dearth of new builds, will further depress available stock and – all else being equal – push up what are already some the highest open market rental costs in Europe.
Irish Times
12-06-2025
- Business
- Irish Times
Nama chief makes good on Lenihan order not to ‘mess it up'
The late minister for finance Brian Lenihan, who set up the National Asset Management Agency (Nama) in 2009, left five words ringing in the ears of agency chief executive Brendan McDonagh shortly before he passed away 14 years ago this week. 'Brendan, don't mess this up,' Lenihan told McDonagh in their last meeting before he died, the Nama chief recalled to reporters on Wednesday. When Nama took over €72 billion of mainly toxic commercial property loans from five banks for a discounted price of €32 billion, the fear was that it would lose billions. Even when Ireland was at the end of an international bailout programme in 2013, members of the rescue team told Department of Finance officials that Nama would likely end up with a €10 billion shortfall. READ MORE It wasn't helped by Nama overpaying to the tune of €5.4 billion for the loans in the first place – adhering to a long-term economic value method forced upon it by legislation to lessen the holes that Nama transfers would trigger in the domestic banks' balance sheets. Many objectives have been projected on to Nama over the years, such as fixing the housing crisis , by virtue of the swathes of land it controlled; contributing more to the common good; and providing more homes for social housing, even though local authorities ended up accepting only about 2,400 of the almost 7,000 units offered over the years. Nama's remit widened about 13 years ago to deliver thousands of homes and develop land in the Dublin docklands . But Nama's core objective, enshrined in the very Act that set it up, was to obtain the best achievable financial return for the State. It made enemies along the way. Try finding a developer that has much good to say about dealing with Nama officials over the years – even ones that it agreed to work with, while enforcing against others. It's not difficult to find critics, too, in the halls of Leinster House. But it is now on track to deliver a lifetime surplus of €5.05 billion – having upgraded its forecast on Wednesday by €250 million – by the time it is wound down at the end of this year. Adding the €5.4 billion it first needed to recoup to break even on the original overpayment actually brings the total financial gains for the State to more than €11 billion. Lenihan would surely have approved of that outcome.
The Journal
11-06-2025
- Business
- The Journal
Nama to return €300m more than projected to Exchequer as it winds down operations
THE NATIONAL ASSET Management Agency (Nama) had published its final annual report before its dissolution. The report reveals a profit of €197m in 2024, marking the agency's fourteenth consecutive year of profitability. Total payments from Nama to the Exchequer are now projected to be €5.5 billion, comprising a €5.05 billion lifetime surplus and €450m corporation tax. The agency, which purchased almost €32 billion worth of bad property development loans from Ireland's banks after the 2008 financial crash, is on course to return an additional €300m to the fund, surpassing earlier projections. Established in 2009, Nama was formed during the banking crisis to deal with non-performing property loans acquired from Irish banks. Beginning life with a large balance sheet, over time it sought to shrink it. It was announced in July last year by then-Minister for Finance Jack Chambers that Nama would this year wind down operations. The agency has been paying into the Exchequer since 2013. Including €400m paid in last year, a total of €4.69 billion has already been paid into the fund. The remaining €800m will be transferred by the end of this year. Nama generated €600m in cash during 2024, which brought the total cash generation from its inception to its end to €48.3 billion. Advertisement The agency is on schedule to have completed its wind-down by December 2025. Its chief executive Brendan McDonagh, who made headlines in recent months due to his consideration for the role of Housing Tsar , said that Nama's contribution to the Exchequer show how 'effective' it has been at recovering finances for the state. 'The Nama Board and my colleagues throughout the agency have always seen our role as set out by the legislation passed by the Oireachtas in 2009 as trying to do the very best we can on behalf of the taxpayer and the State,' he said. 'Every decision, every engagement with a debtor, every transaction – they were framed against a commercial backdrop of maximising the amount that we believed could be recovered for the State.' He thanked his colleagues for the work they have undertaken since Nama's inception in 2009. Some key points highlighted with its final report included Nama's housing output. Between 2014 and 2024, both years inclusive, the agency funded or facilitated the delivery of over 42,500 new homes. Over 14,500 were directly funded by Nama. The report stated that there is potential to deliver a further 4,000 units on two major sites acquired by Nama in north Dublin and Kildare. The units will be retained in state ownership after Nama's dissolution. Nama's Chairman Aidan Williams said that ultimately its greatest achievement is 'something unique: the organisation has succeeded in achieving its aim of managing itself out of business. 'We have never lost sight of the fact that Nama, unlike other commercial entities, was designed to disappear.' Readers like you are keeping these stories free for everyone... A mix of advertising and supporting contributions helps keep paywalls away from valuable information like this article. Over 5,000 readers like you have already stepped up and support us with a monthly payment or a once-off donation. Learn More Support The Journal
Irish Times
11-06-2025
- Business
- Irish Times
Nama increases State contribution forecast to €5.5bn as windup nears
The National Asset Management Agency (Nama) has increased the estimated lifetime cash contribution it will end up giving to the exchequer by €300 million to €5.5 billion, as the State-owned bad bank prepares to be wound down by the end of this year. The increase has been driven by an upgrade to the agency's lifetime surplus target to €5.5 billion from €4.8 billion, previously. It has also marginally increased its corporation tax projection by €50 million to €450 million. 'The Nama board and my colleagues throughout the agency have always seen our role as set out by the legislation passed by the Oireachtas in 2009 as trying to do the very best we can on behalf of the taxpayer and the State,' said chief executive Brendan McDonagh . 'Every decision, every engagement with a debtor, every transaction – they were framed against a commercial backdrop of maximising the amount that we believed could be recovered for the State.' READ MORE Nama, which was set up in 2009 to take over toxic commercial property loans from the country's banks, said on Wednesday its portfolio has fallen from a peak of €32 billion to less than €100 million fair value. This has been through a mix of selling of portfolios of loans over the years and debtors repaying their loans by working with Nama, or refinancing elsewhere. Nama generated €600 million of cash last year. [ Cost of probe into Nama's Northern Ireland sale tops €10m Opens in new window ] Nama is on track to take over the remnants of Irish Bank Resolution Corporation (IBRC), formerly Anglo Irish Bank , and the enlarged organisation dissolved by the end of this year, subject to enabling legislation being passed. The remains of both will end up in a special resolution unit within the National Treasury Management Agency (Nama). Nama generated €600 million of cash last year, brining the total since its inception to €48.3 million. The exchequer has so far received €4.69 billion of Nama's expected lifetime contribution. The agency reported a €197 million net profit last year, marking a 14th consecutive year of profitability.
Irish Times
05-06-2025
- Business
- Irish Times
Department objected to Government's ‘housing tsar' amid concerns over pay and recruitment
The Department of Public Expenditure sought to block the approval by Cabinet of the so-called ' housing tsar ' in April, new internal records show. The Government department responsible for State spending cited concerns about the lack of a business case for the role, the implications for wider public pay policy and concerns about the process for the selection of the preferred candidate, Brendan McDonagh , the chief executive of Nama. Mr McDonagh withdrew from consideration for the role after political concerns were raised about the possibility that he might retain his €430,000 salary at Nama in the new job, and public disagreements between Coalition partners Fianna Fáil and Fine Gael over the issue. The Government intends to proceed with establishing the role to head a new 'Housing Activation Office', which is being created in a bid to speed up the building of homes to ease the housing crisis. READ MORE But it is understood objections from the Department of Public Expenditure over the role have not yet been addressed. [ Nama's Brendan McDonagh says he could have added 'value' to new housing delivery agency Opens in new window ] The proposal is not yet ready to be signed off at a meeting of the Cabinet housing committee scheduled for today, though senior sources expect that possible names for the post will be discussed by the leaders of the Government parties soon, possibly next week. Newly released emails between senior officials in the Department of Public Expenditure ('DPer') and the Department of Housing – issued under the Freedom of Information Act – reveals concerns about the role. DPer officials told their counterparts in housing on Friday, April 25th that the memo relating to the role was 'not in position to go to Government' the following week. 'We have only got sight of the draft today and we need time to properly consider a number of elements, particularly around the organisation structure,' the spending department told them. DPer complained that its pay policy division had not received a request to sanction the post describe this as 'the usual process'. 'There seems to have been no engagement with them on this and the wider pay policy implications,' the officials said. There was, the department said, no business case made; the pay rate was not disclosed; there were 'unclear' references to 'contracted expertise' for staff; and no background material was supplied on the recruitment process 'that appears to have been undertaken for the selection of the appointee'. Earlier, Eoin Dorgan, an assistant secretary at the Department of Public Expenditure, had written to the Department of Housing warning that several issues would have to be considered before the memo could go to Government. They included the functions and objectives of the HAO, its Exchequer implications, pay and conditions for the chief executive and wider staff and the precedents established by them and how the new office would interact with 'wider infrastructure projects and the National Development Plan'. Sources with knowledge of the issues raised said DPer's objections have not fully been addressed yet, though it is expected that the office, with a new chief executive, will be established in the coming weeks. In response to questions, the Department of Public Expenditure said it was continuing to engage with the Department of Housing 'to finalise the establishment of the new office and its operations and also in relation to the arrangements for the CEO of the HAO as appropriate'. Last week, the most senior civil servant in the Department of Housing Graham Doyle told a property conference he did not think a 'housing tsar' was necessary. The department later said in a statement that his remarks reflected his opposition to the term 'tsar' rather than the role.
