State asset management agency Nama will close its 20 per cent deferred payment initiative to new entrants at the end of May, it said yesterday, citing a stabilisation in the housing market.

Nama chief executive Brendan McDonagh said the 80:20 scheme had “achieved its objectives”, with €44 million generated from the sale of the included homes.

“The initiative was only ever intended as a short-term measure to remove the fear of negative equity for buyers at a time when there were few residential property transactions in the Irish market,” he said.

Protects buyers
The initiative, which protects buyers against falls of up to 20 per cent in the value of certain properties for up to five years after purchase, originally applied to 295 homes across 12 counties when it was launched two years ago.

The offer was extended to a total of 412 properties across 33 developments and 13 counties last year, but the agency stepped back from its initial plans to include around 750 homes in the scheme.

To date, 244 of the homes included in the initiative have been sold and the take-up rate of the offer has fallen to 50 per cent of the purchasers, down from around 68 per cent of purchasers in September 2012.

“Feedback from buyers suggests fears of price falls have abated considerably in recent months,” Mr McDonagh said.

“The fact that buyers are no longer actively seeking protection from price falls is a welcome sign that the housing market is stabilising and returning to more sustainable, normalised conditions,” he added.

'Managed risk'
Under the scheme, buyers who can secure a mortgage with one of three participating lenders only pay 80 per cent of the agreed sale price of the property upfront, with the remaining 20 per cent due five years' later.

How much, if any, of that 20 per cent is then due is calculated on the basis of an independent assessment of the property’s value.

It was described as “a very managed risk” by Nama at the time of its launch.