Jack Chambers (Dublin West, Fianna Fail)
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176. To ask the Minister for Finance the number of residential properties his Department plans or expects will be sold by the National Asset Management Agency in 2016 as individual units and-or as part of larger portfolios comprising several units; and if he will make a statement on the matter. [6215/16]

Jack Chambers (Dublin West, Fianna Fail)
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177. To ask the Minister for Finance the number of residential units the National Asset Management Agency sold in 2015; the number that were sold as part of portfolios; his views on the sale of large portfolios to vulture funds, given the current housing shortage; and if he will make a statement on the matter. [6216/16]

Michael Noonan (Limerick City, Fine Gael)
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I propose to take Questions Nos. 176 and 177 together.

The Deputy will be aware that NAMA does not own residential property and therefore is not in a position to sell such properties to any prospective purchaser. Rather, NAMA has acquired loans that are secured by property, which in some cases may be residential property. The properties that secure these loans are owned by NAMA borrowers, in the same way a homeowner owns a home which is subject to a mortgage provided by a bank. NAMA's legal relationship to those properties is similar to a bank which holds security over a property.

NAMA, unlike other lenders, generally owns no residential mortgages, owner-occupier or buy-to-let, in its loan portfolio. In a very small number of cases the principal private residence of a NAMA borrower may be pledged as security for a NAMA loan.

A property securing a NAMA loan may be brought to the market for sale by the borrower or receiver in one of two ways, either (1) as part of a portfolio of assets, or (2) individually, in each case to generate proceeds to repay the borrower's loan to NAMA. Again, in much the same way a homeowner may sell their home and use the sale proceeds to repay their mortgage. The sale of properties securing NAMA's loans is managed directly by the borrower/property owner or, where the property is the subject of enforcement, by the appointed receiver/administrator acting on behalf of the borrower/property owner. NAMA requires that the sale of properties by borrowers and receivers are openly marketed to ensure that the best available price in the market at the time of the sale is achieved.

In its capacity as a secured lender, I am advised that NAMA approved the sale by borrowers and receivers of 5,345 residential property units in 2015. 89% (4,783 of the 5,345 units) were sold on the open market by NAMA borrowers and receivers in individual sales transactions to individual property purchasers.

I am further advised that the remaining units, 562 units (11% of the total), were sold on the open market by NAMA borrowers and receivers as part of larger group or portfolio sales. The properties that were sold in groups or portfolios were typically already tenanted and vacant possession was not sought prior to the sale. Such portfolios are, as a consequence, generally acquired by investors seeking long-term rental streams and therefore existing tenancy arrangements tend not to be impacted by such sales.

I would also refer the Deputy to NAMA's Annual Report and Accounts, which are available on the NAMA website, .These reports cover each full year of NAMA's operations and provide a breakdown of disposals by transaction type, sector, and location, as well as the number of property units disposed of by NAMA borrowers and receivers. In particular, I would refer the Deputy to pages 14 -19 of NAMA's 2014 Annual Report for the most recent breakdown. I expect that NAMA's upcoming 2015 Annual Report will be published within the next two months and will contain an update of this information.

More generally, it is NAMA's policy that, where possible, borrowers and receivers should avoid seeking vacant possession of residential property in advance of asset sales conducted by the borrower or receiver and in loan sales conducted by NAMA in order to minimise disruption to people living in these homes. As a consequence, such assets and loans are acquired typically by investors seeking long-term rental streams. Therefore existing tenancy arrangements tend not be impacted by such sales. NAMA expects every acquirer of its loans to comply with their legal requirements to respect tenant rights in accordance with their lease terms.

Prior to facilitating the sale of any assets or loans secured by residential property, NAMA ensures that all avenues to use the properties for social housing have been exhausted. The Deputy will note that NAMA made practically all of the vacant residential stock in its original loan portfolio available for social housing. I am advised that NAMA identified 6,635 units for social housing. Local authorities confirmed demand for 2,531 of these units and 2,042 of these have been delivered.

Also, before facilitating the sale of assets or loans, NAMA reviews the assets of every debtor to establish if they could be used for residential development. In the context of a recently advertised loan sale, for instance, NAMA removed 16 borrowing connections from the proposed sale as it identified properties owned by these borrowers that could be used to deliver additional residential supply on a commercial basis, funded by NAMA. These sites will contribute to the achievement of NAMA's stated commercial objective of funding the construction of 20,000 new homes in Ireland by 2020, subject to commercial viability. This represents a significant contribution by NAMA, in line with its commercial mandate, to future residential supply in Ireland. The residential units delivered by borrowers through NAMA's residential funding programme will be sold in individual lots on the open market.

Aside from the sites being developed through NAMA's residential funding programme, it is my understanding that there are relatively few loans remaining in NAMA's portfolio that are secured by residential properties. Furthermore, it is decision for NAMA, in line with its independent commercial mandate, to ascertain the appropriate, value maximising strategy for any such loans.

It is important to highlight that the purchase or sale of a loan or a residential unit from one entity to another does not increase or reduce the supply of housing in the market. It is through the construction of new residential units that supply is increased. It should be noted that, in addition to repaying its debt, NAMA is using the proceeds of loan repayments and loan sales to fund the construction of new homes on a commercial basis. This is in accordance with NAMA's Section 10 obligation to seek to protect or enhance the value of its acquired assets. In this way, NAMA's loan sales do contribute to increase the supply of residential units in the market.

Finally, as the Deputy will be aware, the Consumer Protection (Regulation of Credit Servicing Firms) Act, 2015 was enacted on 8 July 2015. This Act ensures that relevant borrowers, whose loans are sold to third parties, maintain the same regulatory protections they had prior to the sale, including those provided by various statutory codes such as the Consumer Protection Code, Code of Conduct on Mortgage Arrears, and the Code of Conduct for Business Lending to Small and Medium Enterprises.