Recent media reports have suggested that NAMA is running into serious difficulties in valuing loans due to borrowers’ lack of solid legal title to the the properties used as collateral for the loans.

Over the past decade, property developers were able to avoid paying stamp duty by not taking legal possession of acquired properties, but developing them under licence.

Deputy Burton has challenged both Brian Lenihan and his predecessor as Minister for Finance, Brian Cowen, to close this loophole going back a number of years.

Brian Cowen had introduced Section 110 to the 2007 Finance Bill to close the loophole after pressure from Deputy Burton, but he never signed the Ministerial order necessary to give effect to this section.

It now looks as if Fianna Fáil’s failure to act is coming back to haunt them; it could be NAMA’s achilles heel.

Speaking in the Dáil today, Deputy Joan Burton said:

“What is the position in regard to section 110 of the Finance Act 2007, which was introduced by the Taoiseach as Minister for Finance? That section provided for the closure of a loophole whereby property developers were avoiding the payment of stamp duty. This provision was included in the legislation after a long campaign by the Labour Party but was never implemented.

“The Minister for Finance has given a statement to the examiner from Brussels indicating that we may now see legislation to close off this loophole because, otherwise, the whole NAMA process, bad as it is, will sink further. As a result of this loophole that the Taoiseach engineered and then refused to close, we have a situation where most of the properties being transferred to NAMA have no title in terms of the associated loans.

“There is no capacity for NAMA to work, even in its appalling way, without this loophole being closed. It is four years since the Taoiseach and I engaged in this debate on numerous occasions in this Chamber and in the dungeons of the committees as we discussed the details of the Finance Bill 2007.

“As a result of his failure to close this loophole, it will now cost the Irish taxpayer not just the €250 million that the Taoiseach’s own consultants, Goodbody Consultants, predicted at the time, but probably now a further €20 billion in bad loans. Not only are those loans bad but the underlying securities have no title.

“The Minister for Finance made a statement to the examiner from Brussels that he is considering bringing in legislation to close off this loophole finally in order to put the rickety NAMA train back on the tracks somehow or other. The Taoiseach, as the leader of the Government, did not know what the Minister for Defence, Deputy Willie O’Dea was doing. Does he know what the Minister for Finance is doing when he is in Brussels?