Vultures make a killing on NAMA property

By Diana O’Dwyer

A little noted feature of the so-called ‘recovery’ from the banking and property crash is the sell-off of residential and commercial property to international capitalist investors. Typically enough, the impact on the former property-owners and -occupiers has varied enormously, in accordance with their power and wealth and influence over government policy.

There was never any bailout for mortgage-holders in arrears, who along with tenants of bankrupt buy-to-let landlords are being thrown out on the street. Under orders from the Central Bank, 50,000 repossession orders have been issued by the banks. Meanwhile, the cosseted coterie of property developers who crashed the economy and had their loans taken over by NAMA are being paid €11m a year to help sell off their own bad investments.

NAMA paying over the odds for bad commercial property loans was part of the first phase of the government’s strategy to ‘fix’ the banks, which also involved wasting €64 billion on ‘recapitalising’ them. The second phase is to pressure the banks to plug the remaining €30bn hole in their balance sheets from the amounts outstanding on mortgages in arrears. Simultaneously, NAMA is to flog off its remaining property portfolio, preferably fast enough so that it can claim to have made a ‘profit’ before the next election.

Profiteering from homes repossessions

Initially, the banks responded by selling off whole mortgage loan books to foreign vulture funds at knock-down prices. These then swoop in to repossess people’s homes and sell them off. Often the new owners represent yet another form of rentier capitalism, known as Real Estate Investment Trusts (REITs).

These invest money in real estate and then sell shares in their overall portfolio to smaller investors. In keeping with its general ‘development strategy’ of marketing Ireland as a tax haven for foreign capital, the government has attracted REITs here with a two-year tax exemption. They have since become the largest landlords in the state and are likely to be at least at predatory as the home-grown variety, given their only interest is the highest possible return on their investment through the highest possible rent.

With property prices rising again, in part due to competition among all these international investors,  the banks and NAMA are now selling off properties individually again. In many cases, they can now make a profit because more mortgages are back in positive equity. Along with firesales by vulture funds and rackrenting by REITs, this has increased evictions and repossessions and helped swell the housing list to nearly 100,000 households.

We can begin challenging the right of foreign or domestic capital to endlessly profit from the immiseration of mortgage holders and tenants, by demanding an immediate freeze on rents, combined with penal taxation of rental profits. The property must  be brought into democratic public ownership as should the mortgages portfolios they have equired so that the payments can be reduced to affordable levels.