Businesses save €13.5m a year after Nama agrees 212 rent reductions

Nama approved 212 applications for rent reductions from businesses last year, with an annual aggregate rent reduction value of €13.5m.

Alan Shatter, minister for justice, said that although legislative intervention may not be feasible for upward-only rent reviews, Nama is playing a role in dealing with problems by reducing rents on its properties.

In a written Dáil response to Fine Gael TD Nicky McFadden, Mr Shatter confirmed that “a further 56 applications are currently under review. Of the 276 eligible applications received to date only eight have been refused, representing a 97% approval rate by Nama.”

Chief executive of the Cork Chamber, Conor Healy, said yesterday that upward-only rent reviews are providing major challenges to business.

“It has come to the point where tenants are not in a position to pay any increase in rent and are either leaving premises to go elsewhere or renegotiating with landlords.”

Mr Healy said he hoped the rent reduction applications are being replicated in non-Nama properties.

Mr McFadden asked the minister if he had any plans to re-examine the upward-only rent reviews in the context of the Irish arm of the DIY chain B&Q going into examinership.

In Dec 2011, the Government said it would not be proceeding with legislation on abolishing upward-only rent review clauses in commercial leases.

In his Dáil response, Mr Shatter said: “There was a substantial concern that any legislative scheme involving interference in the contractual relationships of private parties would find it extremely difficult to survive a constitutional challenge.

“In addition, the Government was advised that any model proposed would require the payment of compensation to landlords whose rights were infringed in order to ensure that the proposal would be compatible with the Constitution and with the European Convention on Human Rights.

Mr Shatter added that the Property Services (Regulation) Act 2011 provides for the establishment and maintenance of a commercial leases database by the Property Services Regulatory Authority.

“This will assist in providing readily accessible, accurate information in order to determine the market rent payable in respect of comparable commercial properties.

“Work is under way to ensure that the database will be operational at an early date,” the minister said.