Local authorities show NAMA the whip hand

Consider the scenario – NAMA buys a loan which was used to develop an estate; the estate lies partially complete and NAMA want to sell some of the properties; enter the County and City Managers’ Association (CCMA); unless the estate is given a certificate of compliance by the local authorities then not one house can be sold. And in return for these certificates local authorities want an estimated €846m in development levies from either NAMA or the developer depending on the status of the loan. Of course in some cases the local authority will accept a few houses in lieu of payment, elsewhere they’ll be wanting hard cash. The story is reported by the Sunday Business Post who claim there is an ongoing dialogue between the CCMA and NAMA.

A senior official is quoted as saying he believes the local authorities are “holding the reins” on this issue. No compliance certificate, no sale; no sale and NAMA will face difficulty unless of course the estate is to demolished which might hand the reins back to NAMA.

There is an emerging need for co-ordination between NAMA and local authorities and it would seem that in the interaction between the two sides each holds some advantages, in the case of local authorities planning and compliance requirements and in the case of NAMA, cash and decision-making about the future of developments. I have updated the highly subjective and personal NAMA stakeholder graph to include local authorities and consider them to a medium to low requirement for information and a medium to high importance to NAMA.

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Weak outlook on the Irish mortgage market

With the Irish Banking Federation/PwC report on mortgage lending in respect of Q2, 2010 due later this month, the Sunday Tribune yesterday reported that the Independent Mortgage Advisers Federation (IMAF), which claims to represent 60% of brokers in the country, says that credit is being rationed and that there is a decline in both volumes and values of new lending in prospect for this year and next particularly for first time buyers, a vital cohort given the basic standard of the majority of Irish housing and also for their importance to allowing existing owners to trade up.

IMAF predicts there will be 35,000 mortgages this year (there were just under 7,000 in Q1 according to the IBF with 4,224 for new property purchases and the remainder for re-mortgages on the same property or top-ups). They also predict lending to be €6bn this year (lending in Q1 was a total of €1.2bn). So on the face of it, though the assessment by the IMAF is downbeat it would appear they are predicting a pickup from the volumes and values seen in Q1. Below are the most recent 8 quarters for both volumes and values of mortgages.

Perhaps the IBF/PwC report later this month for Q2 will give a better steer as to where the market is going.

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