One of the significant outcomes from this week’s two day Budget was the reference by Minister for Finance Michael Noonan, TD, (elaborated upon in a joint press release issued by him with Minister for Justice Alan Shatter) that it had not proved possible for the government to prepare a targeted scheme to alleviate the difficulties which upward only rent reviews are causing for some businesses which would not be vulnerable to constitutional challenge. 

Essentially, the Ministers said the advice given to the Government was that the best chance for any such legislation to pass constitutional challenge would be for the Government to pay compensation to affected landlords (without regard to the financial circumstances of those landlords).   With the Government believing that the level of compensation could possibly exceed  €1 billion per annum, they stated payment of such compensation was not defensible given current economic circumstances.   

The Minister for Finance also noted that NAMA would consider temporary downward reduction in rents on properties owned by NAMA debtors, where the tenant could show “demonstrable trading difficulties threatening the continued viability of the business.”.  Any approved rent reductions would initially be for a twelve month period.    The NAMA moves would not be for the benefit of tenants being part of groups with profitable trading units in and outside of Ireland.  It is notable that the guidance does not refer to any permanent reductions in rents involving both an interim reduction in rent and a commitment to future review to market rent.