[UPDATE: 30th March 2012. The text of both the Fianna Fail Bill, Landlord and Tenant (Business Leases Rent Review) Bill 2012 and the Sinn Fein Bill, Landlord and Tenant (Business Leases Rent Review) Bill 2012, is now now available – both are pretty light on detail for what would potentially be a serious interference in property rights]
The most fractious issue in the Irish commercial property world last year was the uncertainty created by the incoming Government’s commitment to abolish Upward Only Rent Review (UORR) clauses in commercial leases created before February 2010. Although commercial property covers a wide spectrum including office blocks, hotels, pubs, and industrial factories/warehouses, it was retailers who were most vociferous in promoting the need for a mechanism to allow rents to be reduced to current market levels which are 50% less than peak in 2006/7. The uncertainty was ended on 6th December 2011 when Minister for Finance, Michael Noonan announced to the Dail that “it has not proved possible to develop a targeted scheme to tackle this issue that would not be vulnerable to legal challenge or require compensation to be paid to landlords” Following the announcement, landlords were ecstatic, tenants were crestfallen and the property industry generally was pleased that the uncertainty had been removed.
Well today, a measure of uncertainty returns with the tabling of a Bill by Fianna Fail to abolish Upward Only Rent Reviews. The Bill is called the Landlord and Tenant (Business Leases Rent Review) Bill 2012 and it should be published shortly on the Oireachtas website here. Fianna Fail deputy Dara Calleary, who introduced the Bill, sets out more information about its contents and objectives here. Fianna Fail presently has 19 deputies in the 166-member Dail though it is likely to find support from other elements of the Opposition, but ranged against a Government which holds a decisive majority with 109 even after deducting the four who have lost the whip, the Bill seems unlikely to get off the starting blocks.
Elsewhere Sinn Fein has said that it will introduce a similar Bill, the Public Interest (Reviews of Commercial Rents) Bill 2012. Retail Excellence Ireland has predictably welcome the Bill though it appears not to have been tabled in the Dail just yet.
Will the whole UORR debate be re-ignited? Difficult to say, the Government took nine months last year before announcing its abandonment of any changes on constitutional grounds which was apparently after receiving advice from the Attorney General so you might think these Bills will not progress for both legal and political reasons. But you never know…
There are feature blogposts from last year on UORR here and here.
NAMA Wine Lake 
While I welcome it, and it must happen, there is no doubt that it is a disingenuous stunt coming from them. However, it cannot be bad to drag the issue bank into the spotlight.
NAMA numbers: http://www.nama.ie/about-our-work/key-figures/
Retail 2.9
Office 2.6
“This was resolutely opposed by Nama’s chief executive, Brendan McDonagh, who publicly argued that it would reduce Nama’s asset portfolio by 20% or €2 billion.”
http://www.irishexaminer.com/eart.aspx?id=177934&m=5.3.4.0
Here we go again! How to screw the market – and therefore the economy – for another year.
@WSTT please,please NO MORE,not you and John going at it again,please !!!
There,is no chance of it passing,none.
Was,a little surprised when NAMA revealed its holdings,that it had stated a 2BILLION diminution in value from any changes to UORR !
@John, you might be interested in this exchange earlier this week in which Minister Noonan said that of the 114 rent reduction requests received before December 2011 when NAMA published a scheme for dealing with UORRs, that 113 of these were approved. And of the 40 received since, five have been approved and the remaining eligible requests are under review. It’s not worth its own blogpost because the information accords with that provided at the NAMA Oireachtas hearing a fortnight ago.
http://debates.oireachtas.ie/dail/2012/03/27/00110.asp
Deputy Michael McGrath asked the Minister for Finance if he will provide details of the number of enquiries and formal applications made to National Asset Management Agency by debtors and tenants for a rent reduction prior to the issuing by NAMA of the Guidance Note on Upward Only Commercial Leases on 6 December 2011; the number of such applications which ultimately resulted in NAMA approving a rent reduction; the number which were refused by NAMA; and the number still under consideration by the agency. [16621/12]
142. Deputy Michael McGrath asked the Minister for Finance if he will provide details of the number of enquiries and formal applications made to National Asset Management Agency by debtors and tenants for a rent reduction since the issuing by NAMA of the Guidance Note on Upward Only Commercial Leases on 6 December 2011; the number of such applications which ultimately resulted in NAMA approving a rent reduction; the number which were refused by NAMA; and the number still under consideration by the agency. [16622/12]
Minister for Finance (Deputy Michael Noonan): I propose to take Questions Nos. 141 and 142 together.
NAMA issued a Guidance Note on Upward Only Commercial Leases on 6 December 2011. The Guidance Note was intended to deal with situations where tenants of NAMA debtors could show that the rents they were paying were in excess of current market levels and, as a result, the viability of their businesses was threatened. In such circumstances, tenants were given an opportunity to seek NAMA’s approval for rent reductions.
NAMA points out that, prior to issuing the guidance note; it had received and approved a substantial number of applications for rent abatements which it had processed on an informal basis. I am advised by NAMA that, in 2011 prior to the issuing of the Guidance Note, it received 114 direct applications for rent abatement. NAMA states that 113 of these applications were approved and one was refused.
I am further advised that, since 6 December 2011, NAMA has received 40 applications for rent abatements under the terms of the Guidance Note. Five of these applications were approved. Another two were ineligible as they related to properties which are not held as security by NAMA. As regards the remaining 33 cases, the applications are currently under review. In the majority of these cases, NAMA has, as per the Guidance Note, facilitated direct discussion between the landlord and the tenant and is awaiting the outcome of these discussions. In some of the cases, it is awaiting receipt of additional information from tenants. On receipt of the necessary information by NAMA, I am advised that the average turnaround time for decisions in respect of applications is six days and that the Agency works to a turnaround target of seven days.
It’s not the decision, John. I would welcome any decision that was capable of being implemented practically…. As you say it’s the interminable prevarication, by people who don’t understand the finer details of the marketplace and don’t know how to find the right legislate and pass it.
“This was resolutely opposed by Nama’s chief executive, Brendan McDonagh, who publicly argued that it would reduce Nama’s asset portfolio by 20% or €2 billion.”
Whether it passes or not does not alter the fundamental injustice and bizarre nature of these leases. Not passing it will continue to seriously erode FG’s credibility not to mention businesses ability to function and stay afloat. Unemployment? Well it will hardly be helped by UORR? This is not just a legacy issue as far as I am concerned this was a lacuna that was deliberately inserted into our laws by a developer class and those in their pockets.
As for NAMA? Who cares about NAMA’s assets being reduced by €2 billion. I certainly don’t care. I don’t believe their bona fides for a second. NAMA’s assets? Who are NAMA? Please explain that one to me, as far as many of us are concerned, NAMA SPV is just a gravy train that happened to be another figment of the late Brian Lenihan’s grand scheme for fixing the Irish economy. NAMA’S failure has been just as spectacular a failure as the blanket guarantee. Yes, it was testimony to his oratorical skills that he piloted it through the Dail just as he piloted his blanket guarantee through the Dail he ran circles around his peers of the time even those who opposed it, but running circles round people does not guarantee successful outcomes. In fact, it can be and was the worst of outcomes.
NAMA and its piddling losses are the least of our worries. The assets were dumped into NAMA the 58% write down had to come from the bailout/ MOU and the rest of their eventual losses guestimated at 12 to 14 billions by real economists will also have to be picked up by us, eventually. That is the reality. However, ever before that, the country will have had to negotiate a major debt write down or will have defaulted years before our SPV Private NAMA is ever forced to come clean about its nefarious activities. Just look at the post on here about Sinn Fein and their Dail questions on NAMA. It was a real eye opener. I just don’t see NAMA or regard NAMA as being for the public good. Never was and never will be.
When I heard the familiar tack of Michael Noonan talking about ‘having to compensate landlords for loss of income’ and that, ‘it would be too hard to bring legislation’ I just said to myself, spare me, here we go again. Hepatitis C time! Waffling, spoofing and hoping to give the general impression of “hopelessness’ of “impossibility” don’t even attempt to challenge my cant.
You can just as easily argue the toss on the other side and say that tenants were the victims of price fixing and monopolistic activities and that they will have to be compensated and that people who lost jobs have might have a claim also. It can be pointed out that there was a duopoly of auctioneers and developers who “fixed” the market real good and that the pension funds and others seeing that things had been fixed “real good” decided to jump on board these MBS which could only go one way.
Funny thing though, in “This Time is Different”, Rogoff and Reinhard told us that there was 700 odd years of booms and busts. But not in Ireland and this would have to be reflected in the stellar draftsmanship of Irish property law to reflect the unusual fact that values of property and rents only ever go up!
@NWL thanks for that,lots of the work for the RICS “professionals”,linked the NAMA Guidance Notes.
In summary,they approved 5 out of 40 apps,since their mea cupa,after deliberately interfering in this process.They,completly misrepresented and scaremongered the D of F regarding the impact on its portfolio.
The obnoxious request for more info. business strategy,appears to be thriving at NAMA,these are distressed tenants paying usurious rents,which part does NAMA not get ?
Click to access GuidanceNoteOnUpwardOnlyCommercialLeases.pdf
One of the provisions is naturally enough another “valuation” from the illustrious,completly independent,world renowned experts, the members of the Royal Institute of Chartered Surveyors.
@NWL,apoligies the “link” is 403 Forbidden,one must have to submit additional information to access it!
Here,is another one,possibly a yank thing,on a lighter note,I would like extend my gratitude to Maeve Dineen in today’s Indo. Always great to start the day with a good laugh,thanks Maeve.Nothing wrong with the colour,it’s ahem just a wee bit short by say a 1Billion!
http://www.nama.ie/publications/
@John, there seems to be a general problem with clicking links to material on the NAMA website and getting a “403 Access forbidden” error message but strangely if you copy the link to the material into the address bar in your browser, it works so copy this
Click to access GuidanceNoteOnUpwardOnlyCommercialLeases.pdf
into the address bar of your browser and it should load the NAMA scheme for dealing with rent reductions.
As regards Treasury and the headline in the Independent today “Our euro isn’t good enough for NAMA” Yes, that was funny and for a moment I thought Treasury was offering €1 for the €1.5bn loans it has with NAMA! I think some developers might have more legitimate complaints in not being able to buy their own property, but in Treasury’s case, that’s not the issue – it is not Treasury that is trying to buy its loans, but Hines or Macquarie.
@NWL interesting company Kenny keeps,reported that the oenophile Barrett was in attendance,at some of the recent exotic functions by the IT.The defense that he has no input over guest lists or attendees,is simply perfidious.He’s a head of state,his security detail must be advised in advance, or can any randomer just turn up.
My interpretation of the derisory offers,was that Treasury had an ongoing highly rewarding role,naturally after shaving a BILLION off the debt courtesy of the knackered Irish Taxpayer.
Bank Teller #1: Does this look like “gub” or “gun”?
Bank Teller #2: Gun. See? But what does “abt” mean?
Virgil: It’s “act”. A-C-T. Act natural. Please put fifty thousand dollars into this bag and act natural.
Bank Teller #1: Oh, I see. This is a holdup?
Take the Money and Run.
regarding the links,thank you.