Launch of vendor finance in Northern Ireland a significant positive for investment and jobs

The National Asset Management Agency (NAMA) will offer vendor finance 1 to potential buyers of commercial property in Northern Ireland to help stimulate investment and create jobs, NAMA Chairman Frank Daly said today. 

Speaking to the Oireachtas Joint Committee on the Implementation of the Good Friday Agreement 2, Mr Daly confirmed NAMA will extend its policy of making vendor finance available to Northern Ireland, after commencing offering vendor finance in the Republic of Ireland last year. 

“Vendor finance will help bring international capital into both the Republic of Ireland and Northern Ireland market and add price tension,” said Mr Daly. 

“NAMA is not a bank and sees vendor finance as an aid to market participation – but applied to the right product and right client, it can be a significant positive for investment and employment in Northern Ireland.”     

Mr Daly said lack of finance and unattractive borrowing conditions are issues in the commercial property market in both the Republic and Northern Ireland and that the Agency’s decision to offer vendor finance aimed to help address them.  

Mr Daly also said the Agency expected to receive European Commission approval imminently for its pilot mortgage initiative to offer homeowners in the Republic a level of protection from future falls in house values. 

“If this mortgage initiative works on the basis of the pilot scheme in the Republic, we are very open to seeing if we can introduce a similar initiative in Northern Ireland with our partner banks”, said Mr Daly. 

“Any initiative available in the Republic of Ireland market will, where possible, be made available and tailored to suit the economic circumstances in Northern Ireland.” 

Mr Daly also told the Committee that NAMA had lent stg£75 million (€90 million) to Northern Ireland debtors to fund the completion of work in progress and working capital – representing approximately 10% of all funding to debtors that has been approved by the Agency. 

Of this total, stg£29 million (€35 million) related to projects in Northern Ireland, with the balance in Britain and the Republic. 

Mr Daly reiterated that NAMA would not engage in so-called “fire sales” in Northern Ireland. 

“We do not, nor do we intend to, resort to fire sales or dumping of assets. We have the time and the capacity to take a longer-term view. NAMA’s workings in Northern Ireland to date are confirmation of this approach”, he said.

1 Vendor finance is a mechanism to generate sales transactions by providing finance to potential buyers of commercial property. With financial institutions reluctant to underwrite lending to property, NAMA proposes to offer up to 70% vendor debt finance to purchasers of commercial property that is under the control of NAMA debtors or receivers appointed by the Agency.

2 The Joint Committee on the Implementation of the Good Friday Agreement is an all-party Oireachtas Committee that also includes members of the Northern Ireland Assembly and Northern Ireland MPs.