Minister for Finance, Michael Noonan presented his leg of Budget 2012 this afternoon which mostly comprised changes to taxes. He announced that stamp duty on commercial property transactions would drop from 6% to 2% with effect from midnight tonight – One Warrington Place has just become €1m cheaper. He also announced changes to Capital Gains Tax on commercial property transactions where the property is held for more than seven years but we must wait a few hours before we get the full details.
The Minister dropped the clanger that the much-anticipated Upward Only Rent Review (UORR) reform which was promised in the Fine Gael manifesto and which has been regularly referred to by justice minister, Alan Shatter, as being prepared, examined by the Attorney General and to be brought before the Oireachtas before Christmas 2011 – is to be scrapped. Now it’s been decided that it’s legally too difficult, conflicts with the Constitution, would be open to challenge and would mean landlords needed to be compensated. Landlords will be happy. And at least there is certainty which will be welcomed by many on the sidelines of the property industry. Beleaguered commercial tenants will be dismayed and incandescent with rage. From this perspective, Minister for Justice, Equality and Defence, Alan Shatter and Attorney General, Maire Whelan both look like clowns who have stymied the investment property market for ten months and delivered a big fat nothing to beleaguered commercial tenants,
With UORRs, Minister Noonan did offer a ray of hope to commercial tenants of NAMA property, and said that NAMA would issue details of a scheme today to help commercial tenants in NAMA property whose businesses were jeopardised by high rents. NAMA has produced a document (available here) outlining the scheme, and in essence if you’re a business tenant of a NAMA property and can prove that your business is at risk because of existing lease rents, then NAMA will consider your position or in most cases as NAMA is not in fact the direct owner of the property, will facilitate an arrangement between the owner and the commercial tenant.
The other NAMA-related announcement was that NAMA is to get an advisory group which will advise the Minister for Finance on the management/disposal phase of NAMA’s existence. Looked to me like a kick in the teeth to NAMA’s existing staffing and skillsets but regardless a NAMA spokesman said “NAMA welcomed the announcement of the establishment of an advisory committee” and that the Agency “forward to engaging with the Group in the months ahead”. The Minister said that he would issue a formal Direction to NAMA pursuant to the NAMA Act setting out the brief of the new group and how the Agency was to cooperate with it.