Wednesday, 27 November 2013

Questions (107)

Bernard Durkan

Question:

107. Deputy Bernard J. Durkan asked the Minister for Jobs, Enterprise and Innovation the extent to which upward-only rent reviews continue to present problems in the retail and commercial sectors; and if he will make a statement on the matter. [51095/13]

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Written answers (Question to Jobs)

I am acutely aware of the difficulties that upward only rent reviews cause for some businesses who had signed their leases before such clauses were abolished on 28th February 2010. The Forfás report “Costs of Doing Business in Ireland 2012”, which was published on 8th April 2013 last, indicates that business costs have reduced significantly in recent years with overall price levels in the economy falling back to levels last experienced in 2002. The improvement in business cost competitiveness has been driven by dramatic reductions in property related costs (in terms of purchase and rent levels) and falling prices across a range of professional and business services.

However, the Government has taken steps to address the issue where possible. In the Action Plan for Jobs 2012, the Government undertook to place downward pressure on commercial rents where the National Asset Management Agency (NAMA) had acquired the loan on the underlying property. NAMA has published its policy guidance which will inform the approach to be taken where relevant tenants are experiencing difficulties in paying rents. Under the Guidance Note, which NAMA published in December 2011, it has to date approved rent abatements proposed by its debtors and receivers with an aggregate annual value of in excess of €17m. NAMA has refused only 10 of the 312 applications received to date.

The 2013 Action Plan for Jobs also includes a number of specific actions to support a sustainable commercial property market, including ensuring that the commercial leases database is established and fully operational in 2013. The Commercial Leases Database was published by the Property Services Regulatory Authority on 31st October, 2013. The total number of leases entered into since 1 January 2010 to 31st October 2013 is 24,747.

The Commercial Leases Database is available on the Property Services Regulatory Authority website: www.psr.ie . It will bring much-needed transparency to the commercial property market and will empower both landlords and tenants to reach a commercially informed decision when negotiating new leases, dealing with rent reviews, and lease restructuring and renewals.

In relation to the rent review issue in historic leases, the Government has repeatedly urged that maximum flexibility be shown during the course of rent negotiations and has called upon all parties to act responsibly and in a way which takes full account of the broader national interest.

The Action Plan for Jobs recognises the importance of the retail sector to the economy and the 2013 Action Plan contains a number of measures aimed at supporting that sector. These include an initiative to increase the number of small businesses trading on-line and an initiative to streamline business licence application procedures. Employers in the retail sector can also avail of the JobsPlus initiative which provides financial assistance to employers who recruit people who have been out of work for 12 months or more. The Government has also established an Interdepartmental Group to consider further possible measures to assist the retail sector, which are currently being considered for inclusion in the 2014 Action Plan for Jobs.

The Government attaches great importance to a thriving retail and commercial sector, and is committed to supporting these sectors wherever support is feasible. Continuing action is being taken across Government to reduce the costs of doing business, which is intended to have a positive impact on areas such as energy, local authority rates, and the administrative burden involved in companies complying with Government regulations and tax systems.