THE NATIONAL ASSET Management Agency is to offer vendor finance to potential commercial property buyers in Northern Ireland, in order to assist in the stimulation of investment and job creation.
“Vendor finance will help bring international capital into both the Republic of Ireland and Northern Ireland markets and add price tension”, said Nama Chairman Frank Daly during the Oireachtas Joint Committee on the Implementation of the Good Friday Agreement on Thursday.
A similar scheme was offered to buyers in the Republic of Ireland last year.
Vendor finance relates to the practise of a company offering a loan to a customer in order for them to buy products from it – in this case, commercial property.
Daly said that unattractive borrowing conditions in the commercial property market across Ireland had led Nama to offer the initiative.
The Committee heard that Nama had loaned £75 million (€90 million) to Northern Ireland debtors to assist in the completion of work in progress and working capital, which represented about 10 per cent of all funding to debtors that has been approved by the Agency.
Daly said that of this total, £29 million (€35 million) was linked to projects in Northern Ireland, and the remainder was related to projects in Britain and the Republic.
Pilot mortgage initiative
Daly also said that the agency was waiting on approval from the European Commission in order to launch a pilot mortgage initiative for homeowners in the Republic. He said that any such initiative available in the Republic of Ireland market would, where possible, be made available and tailored to suit the economic circumstances in Northern Ireland.
Daly said that Nama hoped to offer homeowners in the Republic a level of protection from future falls in house values through the initiative.
Under Nama’s scheme, a purchaser would provide 10 per cent of the price of a property and Nama would put in a further 20 per cent, in order for a buyer to secure a 70 per cent mortgage from a bank.
However, despite Nama’s contribution the buyer would still have to be pre-approved for a 90 per cent mortgage in order to avail of the offer.
The agency told the Committee it intended to start with approximately 75 units, in order to test the success of the scheme, and that it hope the locations of the units would be “geographically spread” across the island.
‘Lifestyles’
When questioned about the “lifestyles” of some debtors engaging with Nama, Daly said: “It would be seen as totally inappropriate for people who owe taxpayers massive amounts of money to live an ostentatious lifestyle – we have made that very clear to debtors. It would be fair to say that incidents of that have reduced.”
On the topic of debtors drawing salaries in return for their engagement the agency, Daly said the decision to allow this was “sometimes a hard one” but insisted that some debtors were the people most qualified to secure a good return for taxpayers’ investment.
The Committee warmly welcomed commitments by Nama to avoid engaging in “firesales”, both in Northern Ireland and the Republic.
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