16th September 2009 – In response to this afternoon’s pronouncement by the Government in relation to NAMA, the Irish Auctioneers & Valuers Institute (IAVI) has expressed its hopes that the legislation will be quickly agreed so the economy and market can begin to move on.

Aine Myler, IAVI President said that “NAMA will have considerable powers and could potentially have a huge impact and influence on the entire market. The IAVI urges the Minister to quickly publish the legislation he referred to in his speech, which is intended to limit the potential for market distortion by NAMA.

“The 30 per cent write down is in line with predictions and will enable the Government to walk the fine line that keeps it from having to nationalise elements of the banking sector immediately. As the Minister indicated, this figure is an estimate, provided today to give the public an idea of the scale on which NAMA is likely to operate. However, as he stated, each loan will have to be considered separately and on its own merits. The IAVI is pleased that the Minister and his Department have recognised the difficulties involved in these valuations.

“The quality of loans is wide ranging and affected by a number of factors. Well located and serviced land or developments will have a better long-term prognosis then those in provincial or semi rural areas. Without the specific details, it is impossible to determine the values. Further investigation is needed into the class and calibre of both the assets and securities involved.

“The IAVI is pleased to note that the success of NAMA centres on inflation-adjusted prices rather then prices returning to boom time levels and believe that tying its break even position to a ten year span of is not an overstatement.

“We agree with the Minister that the credit market is in an unsustainable “crisis condition” and hope that the establishment of NAMA will alleviate these problems, free up the flow of liquidity and give the people who make up this economy the freedom to make decisions, make purchases and stimulate the economy,” she said.

In relation to personnel and appointments to the Board, the IAVI is concerned that NAMA will not become an overpopulated quango.

“What is needed is a streamlined organisation with an economic focus that seeks existing expertise from the banking and property sectors through outsourcing or secondment.

Responding the windfall tax of 80% on profits gained from increases in land value, due to rezoning she said, “This is simply a knee-jerk reaction, which, if implemented, will act as a depressor to market value. Its potential affect requires careful analysis.

“Taxing the use and development of all land to the point of unviability appears to be a headline grabbing, political manoeuvre to make the NAMA legislation more palatable. A more comprehensive approach to the taxation of land should have been introduced when the values were increasing during the boom. Doing so now merely serves to further undermine the market.

“Although development has become a dirty word, a thriving economy requires infrastructural and development activity. If there is little or no incentive for development due to penal tax rates, then we can start to usher in a new era of stagnation while the rest of the world goes forward without us. We don’t need tax rates to drive down the cost of land, the market is doing this all by itself,” she said.

Ends

Note to editors:

Founded in 1922, The Irish Auctioneers & Valuers Institute (IAVI) represents approximately 1,800 property professionals nationwide. More details are available on www.iavi.ie

For more information please contact Carina O’Neill, Bracken PR on 01-6773277 or 087 222 8124.