NAMA and the 'social dividend'

The Week in Housing 23/06/23

This will be my last post before the summer break. Thanks to everyone who has read The Week in Housing so far this year. Thanks also to the guest contributors, including Robert Sweeney, Joseph Kilroy, Fiona Dunkin, Renters’ Voice and Madeleine Johnson. The Week in Housing will return in September.

As noted last week, NAMA was subject, almost form the outset, to demands that it provide a ‘social dividend’. This was in part predicated on one part of the legislation, which stated that one of the Agency’s purposes was to contribute to the social and economic development of the state. In practice, from the outset NAMA interpreted their remit in the most narrow commercial fashion possible.

There is an interesting contrast here with the Resolution Trust Corporation, the US ‘bad bank’ set up in the mid-1990s, and upon which NAMA was largely based. The RTC was set up in response to what is known as the ‘savings and loan crisis’. While it was primarily focused on re-packaging and selling distressed assets, one of its key objectives was to support affordable housing. This objective was included as US lawmakers were unwilling to pass the legislation underpinning the RTC without it. In other words, if the RTC was going to bailout financial institutions, it needed to also do something to help wider society. By the end of it’s lifetime, the RTC provided over 100,000 affordable homes, in partnership with local authorities and housing associations. Such an objective could easily have been included in the NAMA Act.

I’ll return to the issue of NAMA and housing below, but here I want to focus mainly on the non-residential component of NAMA’s portfolio. In the first few years of NAMA, most of the debate around the social dividend related to the social or community use of commercial real estate spaces, such as office blocks. This was no doubt partially because this was in the days before the housing crisis, and partially because the overwhelming majority of NAMA assets were not housing.

There were a few really interesting cases through which this debate took place, and which I researched between 2013 and 2015.

The Mabos project, which was situated in the heart of the Docklands on Hanover Quay, was a collective project which provided work space for creative workers and organised social activities, including tech workshops, skateboarding and graffiti art etc. Mabos also initiated a number of projects aimed at contributing to the Grand Canal Docks area, such as  getting together teams of volunteers who would come together for a day to clean up, plant and paint in the neighbourhood.

Mabos was housed in a former bicycle factory, a unique location with an interesting industrial heritage. The space had a DIY aesthetic without being run down. It was located on what was at the time a largely abandoned stretch of the Docklands and brought life to the area at weekends and during the evenings (two things which were priorities under the Docklands SDZ development plan).

The building, which is now, ironically enough, Air B&B’s headquarters, was reportedly repossessed by Ulster Bank and had the receivers firm Grant Thornton appointed to it. It ended up in a fund linked to Nama, Oaktree (an LA Hedge Fund) and Bennett Construction. Despite some negotiations, the fund evicted Mabos and redeveloped the building into commercial office space.

Another illuminating case was the Complex Theatre, located in Smithfield. The Complex Theatre had set up in an empty office space, with permission from the developer/owner, but the building was transferred to NAMA around 2011. At the time, a large proportion of the ground floor retail space in Smithfield was vacant. The Complex was an extremely active and innovative independent theatre, which brought much needed life to Smithfield at a time when the area was struggling. It also worked closely with the local community.

NAMA appointed Savill’s to act as receivers on the building (which means Savills were responsible for it) and they set about evicting the Complex. The Complex was kicked out in January 2012 and the building was vacant for years thereafter, much like a lot of Smithfield during those years. Thankfully the Complex has survived in a new premises, and gone from strength to strength in the years since.

There were quite a few other disputes similar to the above two cases. To my knowledge, in all these cases NAMA took a very commercial approach. They do not appear to have interpreted the section of the legislation which have NAMA a social remit as having any immediate bearing on asset management decisions, at least in these cases.

Interestingly, there was not a huge amount of explicitly political resistance to NAMA. One such example, and one I was involved in myself, was a campaign called Unlock NAMA. Our high point was occupying a NAMA building on Great Strand Street (Dublin 1) for one day, before being evicted by Guards! As far as I remember, Apollo House, the site of an extremely high profile occupation in December 2016, was also NAMA controlled.

Anyway, as the housing crisis began to slowly emerge (roughly from around 2014/2015), the question of NAMA’s role in housing came into focus. NAMA controlled debt linked to around 16,000 residential units. Eventually, the debate around this issue led to the formation of a scheme which involved identifying suitable residential units and, where deemed suitable, NAMA could make these available for lease or purchase to local authorities or AHBs. My understanding is that such units were sold/leased at commercial rates (I’m open to correction on this point). The Housing Agency provides data on this scheme here.

But the real lost opportunity was around development land. Development land was the largest asset class held by NAMA. As far as I know, full details of the nature and location of this land was never made available to the public. But given where we are now, with our well known problems in terms of housing supply and infrastructure, a compelling case can be made that this development land should have been subjected to an audit and a strategy developed to explore its potential to meet long term infrastructure and development needs of the state. To my knowledge, this never happened.

In fact, as far as I know the Government never conducted any kind of research to examine the potential or actual impact of NAMA on urban development. When we recall that, as I mentioned at the outset of the first installment of this series, NAMA acquired assets which had a value at the time equal to 47% of Irish GDP, this is quite extraordinary. It speaks to two important but closely related issues. First, the failure to understand the interdependence of the property and financial systems, i.e. to understand how any intervention in the financial system in simulatenously an intervention in how our cities develop. Second, a failure to identify how we can leverage financial interventions to meet public policy objective in areas like urban development and housing.

News & Events

Consider signing CATU’s petition calling for a number of housing policy changes.

What I’m reading

As was widely reported in the news this week, Threshold have published their annual We Are Generation Rent report, which as usual contains loads of fascinating insights into the experience of renters. Housing Europe have just published their new State of Housing in the EU report. The International Journal of Housing Policy have a new special issue on Housing, Health and Inequality that looks great. On the subject of PRS regulation, this new piece looks at the impact of banning BTL investors on rental markets. I’ve just finished reading Dan Immergluck’s Red Hot City, a great book exploring neoliberalism in Atlanta.