Monday, July 4, 2011

Nama holding back property recovery, says solicitor | The Post

A Cork solicitor has claimed that the National Asset Management Agency (Nama) is delaying recovery in the property sector by seeking unrealistically high prices for properties it is selling.

Niall Murphy, a solicitor in Ballincollig, has been acting for a young couple who paid a booking deposit on a house in Cork in February last year. The house was valued at €260,000.

The property had not been built at that stage, so they signed contracts subject to being able to get a mortgage when the property was completed.

‘‘In May 2011, we were notified that the property was complete," Murphy said.’ ‘I obtained the valuation from a valuer appointed by the bank of €240,000, based on which the bank was in a position to issue a loan offer to our clients.

I wrote to the builders’ solicitors, seeking confirmation that we could complete at this figure. They replied by saying that Nama would only sanction a sale price of €250,000."

Murphy said the figure meant Nama was only accepting a drop of €10,000 - less than 4 per cent - in the price in the 15 months since the booking deposit had been paid.

Data from the Central Statistics Office show that residential property outside Dublin fell in value by 11 per cent between March 2010 and March 2011.

On that basis, Murphy said Nama was looking for an unrealistically high price and rejecting the chance to sell a property ‘‘for a fair market value’’.

He said he had asked the developer’s solicitors for a copy of the correspondence with Nama, in which the agency set out its position.

However, the solicitor said it was waiting for a reply from Nama. ‘‘Clearly, the price that is being sought is not the market price.

‘‘Nama appears to be attempting an artificial price support mechanism in excess of what the market is willing to pay, to keep the price of the underlying assets [and therefore the value of loans they have acquired] artificially high," said Murphy, who outlined the case on his blog at

In a radio interview last weekend, Nama chairman Frank Daly said people who had encountered problems trying to buy property from the agency should contact him directly.

He said Nama was keen to help people to buy property, and was advancing ‘‘modest proposals’’ for credit initiatives to kick-start the property market.

He gave the example of a buyer who wanted to buy a Nama property valued at €20 0,0 0 0, but only had €20,000 in savings and a €140,000 mortgage. Nama could take an equity stake over the remaining €40,000.

The property would be revalued in four or five years, and if the house had fallen in value by €40,000 or more, Nama would ‘‘take the hit’’, Daly said.

Posted via email from quirkeproperty's posterous

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