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Finance

PRESS STATEMENT RE NAMA'S ATTEMPTS TO DISTORT THE TRUTH.

 

Friday 27th November 2015

 

 

Mick Wallace TD

 

Given the fact that NAMA have gone to great lengths to distort my contribution at Leader's Questions yesterday, re their handling of the Northern Ireland loan portfolio, Project Eagle, I thought it best to publicise the questions and answers, which were contained in my last correspondence with the agency. I enclose same below.

Mick Wallace

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NAMA remains a Secret Society.

Trying to get information from NAMA about transactions conducted in the name of the public interest and ostensibly with public money is proving to be a seriously unfruitful process, as demonstrated by the response to one of my freedom of information requests.

Minister Howlin’s Freedom of Information legislation - which he consistently hails as an example of international best practice – has been a disaster, with exorbitant fees (in the UK there are no fees as the government takes the position that the information subject to FOI literally is the property of the public), and a list of full and partial exemptions longer than my arm.

In particular, the partial inclusion of NAMA is nothing more than an insincere gesture towards the concept of transparency, the reality is that any information that would be of interest to the public was exempt from the scope of freedom of information, to quote Minister Howlin, in order to protect the public interest.

Mick.

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A lot of so called stressed assets have been sold on the Irish Market in the last few years, at knock down prices, by both NAMA and the Banks. Nama paid about 32 Billion for Bank loans with a face value of 74 Billion – the missing 40 Billion plus was loaded onto the Irish taxpayer. It was anticipated that NAMA would hold the assets till there was some form of recovery, but that all changed. Instead, many of the assets have been sold to foreign investment funds at bargain basement prices. Those with deep pockets and plenty of money have made a killing at the Irish taxpayer’s expense. Some of them have sold the properties on at huge short term profits -  for example, a six story office block on Mount St in Dublin was sold to a US Fund, Northwood Investors , for 27million in 2012, only to be sold on in 2014 for 42 million – Nice money if you can get it, and just for good measure, much of Northwood’s initial purchase was financed by non other than NAMA. You couldn’t make it up.

A further hit for the Irish people is the fact that a small number of investors have purchased a huge portion of apartments, which were part of stressed assets, and have built a controlling influence in the rental market – which is part of the reason why private rental has continued to rise over the last two years. It appears that a cartel of sorts is having a huge influence on the rental market now.

The Government keep talking up their so called ‘Housing Strategy’ – The reality is that it’s a shambles, as the Government refuse to seriously engage in the construction of State housing, remain overly dependent on the private rental market, and continue to ignore the underlying problems in Housing- Refuse to adequately address the needs of the Homeless, the 100,000 people on the Social Housing list, or those of middle Ireland, who can’t get on the ownership ladder, and are struggling to pay the astronomical private rents.  Only in Ireland…

Here’s my Dáil contribution on the subject with Minister for Finance Michael Noonan, from 16 months ago, January 2014 - The writing has been on the wall for a while…

Thursday, 16th January, 2014

To ask the Minister for Finance if any impact analysis has been carried out on the effects of real estate investment trusts on rental prices here; and if he will make a statement on the matter

Mick Wallace: The Government might view real estate investment trusts, REITs, as a quick fix measure to get rid of properties on the books of the National Asset Management Agency, NAMA, and the banks, but questions must be asked about the increased corporatisation of property, with little financial gain for the State. REITs are not taxed on their rental income as long as they pay 85% of it to their shareholders as a dividend, they are exempt from corporation tax as long as their income relates to rental income and non-resident investors are also exempt from Irish capital gains tax. There must surely be implications for the rental market in the years ahead.
 

Michael Noonan: The tax framework for real estate investment trust companies was announced in budget 2013 and introduced into law in March last year in the Finance Act 2013. The first REIT launched in July 2013 made its first property purchases in October 2013, so there has not as yet been sufficient time to determine the impact, if any, REITs have had on rental prices in Ireland.

My officials will be monitoring the uptake of REITs in the Irish property market, but it is not expected that REIT ownership of property will reach the level of concentration at which a distortion of competition in the market may occur. REITs are established in approximately 35 countries worldwide and in general the percentage ownership of property by REITs in those jurisdictions tends to be relatively small, often less than 10% of the total stock. The Deputy will be aware from his own experience in the property market that prospective tenants will shop around all potential landlords for the best deal available, so it is expected that rental values in the Irish market should continue to be determined by normal market forces and not by the presence or absence of REIT landlords.

I also wish to highlight to the Deputy that potential benefits for property tenants were a motivating factor in the introduction of the REIT framework last year. REITs are specifically designed for the long-term holding of income-producing property. They are not designed to hold development activities or to be a vehicle for short-term speculative gains, so they can provide greater scope for stable, long-term tenancies. Globally, REITs are characterised by professional management of the property assets they hold, as the objective for the REIT management is to produce stable, long-term income flows for shareholders. It is hoped that the introduction of this type of professional property management into the Irish market will, in the long term, help to standardise and improve management standards across the rental property sector as a whole, which would be of benefit to both investors and tenants.
 

Mick Wallace: The Minister says that the amount of property held by REITs around the world tends to be small. However, given that such a bank of property is going to flood our market from NAMA and the banks in the next few years, that will probably not remain so here. The rationale behind REITs is to allow people to invest in property without having to manage it themselves. It is a stockmarket version of absentee landlordism. The investors do not have to pay a lot of tax but are buying up large sections of property here.

Some of my property has been sold to foreign investors for less than half of what it could be built for today. The Government says there has been a vote of confidence in Ireland Inc., but does the Minister not think it has been completely confined to property and bonds, rather than to real business? Perhaps we are selling ourselves short. I am not sure that we need to subsidise property tax breaks to such a degree in order to get them to invest here.

Michael Noonan: There is a huge overhang of property, including portfolios held by NAMA and properties being held as collateral for impaired loans across the banking system. The banks have been deleveraging rapidly, especially Ulster Bank. There is potentially an enormous amount of property on the market. Part of the Government's job is to clear the overhang first because there will be no property development in this city or country until that is cleared. It is surprising that the overhang is being cleared so fast.

The advantage of REITs is not only what the Deputy referred to. The big advantage of REITs is twofold. First, the small investor can go in, so one does not need to put up €200,000 or €250,000 to buy an apartment if one wants to invest in property. One can buy REIT shares and put in €1,000, €5,000 or €10,000 as a small investor. One is then in for the dividend.

Second, REITs is not exclusively in apartments, it is spread across a range of different properties. If there is a collapse in one area the REIT is at least protected by values in another area. It is something that is being done in all developed countries now, but it will not dominate the market. It is just another initiative and it is working so far.
 

Mick Wallace: I understood that the original plan behind NAMA was that it would hold properties for a while, rather than flooding the market. Building work is starting again because there is a demand for certain types of property in certain areas where it is not available at the moment. In addition, there is too much property in places where it is not required. However, many large tracts of property that will be sold off will not be bought by Irish people. They will be purchased by foreign investors who will reap benefits at the expense of the Irish people. These people will end up with a lot of rental property, which will give them a monopoly in the game.

The Minister will recall that the really big problem with our building bubble was that a small group of people gained control of most of the land in this city and they land-banked it. They owned over 90% of the land with a potential for development and thus controlled the price of it. Prices went crazy. I ended up paying €5 million for one fifth of an acre because the market was being driven by a small group of people. We now have these people coming in and taking control of the rental market. This is not a normal situation because we have so much property to sell to them.
 

Michael Noonan: The Deputy is pointing to possible future fears but I am fully aware that there are risks in everything. Life is risky. If a Minister wants to avoid risk he or she will do nothing. Of course there is risk in REITs but the risk is managed and is minimal as far as I am concerned. Only two REITs have been established so far and both are capitalised at around €400 million. Two REITs with a total investment of €400 million is not going to distort any market or give anybody control.

 

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councilOn Wednesday, May 29th the Taoiseach reported to the Dail, the outcome of this month's European Council meeting. While responding to the Taoiseach's report, Mick addresses concerns regarding Ireland facilitating tax avoidance for international companies who set up offices here. He also compliments the Tanaiste on his stance on the lifting of the arms embargo to Syria. You can read Mick's contribution below or watch the full debate here.

I am afraid I must disagree with the previous speaker, Deputy Ross. While Ireland might engage in tax competition, it also engages in facilitating tax avoidance on a serious level. Regardless of whether Members like it, Ireland is playing a strong role in a race to the bottom. Do Members wish to see a point at which corporations pay even less than their share and the ordinary citizen is burdened even further in consequence? The findings of Dr. Jim Stewart, professor of finance in Trinity College who is trying to map out shadow banking in Ireland, are interesting. He has stated that many of the companies involved are a way of removing assets or liabilities from a parent company's balance sheet and escaping the regulatory requirements that come with this. He stated that these companies, which are classified as non-trading firms, have a theoretical tax rate of 25%. In reality, they are able to use write-offs in Irish legislation to ensure they make no profits and consequently have no tax liabilities. Overall, Stewart is sceptical about the benefits of shadow banking to Ireland and has stated “As far we’re concerned, we don’t get much out of this”.

I also wish to raise the issue of the lifting of the arms embargo in the context of the summit. I disagree with Fianna Fáil in this regard and agree with the Tánaiste, who deserves credit for the stand he has taken on this matter. The lifting of the arms embargo definitely was a retrograde step and in response to anyone who thinks pouring more arms into Syria's sectarian war will either topple Assad or drive him to the negotiating table, I do not believe that will happen. Instead, it will lead to Russia playing a stronger role and matching any arms the French and British might provide. Moreover, I disagree with anyone who thinks Britain and France actually care about those who are suffering in Syria. I believe both parties are much more interested in using this conflict as a little bit of escapism from the realities of their political problems at home. It should be pointed out that much of the western involvement in the Middle East has helped to destroy secular politics in the region and has unleashed the Shia-Sunni conflict that is tearing it apart. If one considers what the West has been up to in the region for the past ten or 20 years, secular politics has been damaged dramatically by western involvement and what remains is really a Shia-Sunni civil war throughout the region. As for the idea that Shia and Sunni representatives should be sitting down to have a chat at the table, it simply is not like that, as for these people to accept one another would involve denying their faith and it is deeply rooted in Islam. However, the destruction of secular politics by the western powers has caused much of the havoc now being witnessed.

Good health is a result of proper food and hygiene. How can medicaments hels up? Circumstances that can influence your choice when you are buying medications are different. Below are basic reasons about cialis vs levitra vs viagra which one is better. Surely there are also other momentous questions. Choosing the ideal treatment option for a racy disease can get really confusing considering the advantages and disadvantages of the existing treatment methodologies. When you buy remedies like Cialis you have to think about levitra vs cialis vs viagra. The most significant thing you must look for is which works better viagra or cialis or levitra. A long list of prescription drugs can lead to erectile dysfunction, including many blood pressure medicines, pain remedies, and most of antidepressants. Sometimes the treatment options may include erectile disfunction remedies or hormone treatments.

namaleaks

THE TRUTH IS COMING....

Namaleaks is a project that seeks to uncover possible injustice and poor practice related to NAMA (National Asset Management Agency) and financial institutions in Ireland.

VISIT THE WEBSITE

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