Wednesday, 20 May 2020

Questions (534)

Michael McGrath

Question:

534. Deputy Michael McGrath asked the Minister for Business, Enterprise and Innovation her plans to undertake an initiative to address the issues regarding commercial rents in the context of Covid-19; and if she will make a statement on the matter. [5631/20]

View answer

Written answers (Question to Business)

The issues businesses are facing in respect of commercial rents / leases have been raised with me through the Enterprise Forum and Retail Forum, both of which I chair, and other channels.

These are difficult times and many companies have had to temporarily close their businesses and/or premise(s), curtail their activities or make alternative work arrangements due to COVID-19 restrictions. I am keenly aware that some businesses, particularly in the retail sector, are concerned that some landlords are continuing to insist on the payment of rents and leases as normal despite their premises being closed.

At the same time, we must remember that landlords have their own financial obligations, like debt repayments, insurance or security costs, that still need to be paid. Where a landlord has debt in place, their flexibility will likely be driven by what their bank/lender will accept. The Minister for Finance raised the broader issue of rents in meetings with the pillar banks. He referenced this in his announcement of 18 March concerning an arrangement with the banks to the effect that any landlord who has agreed a deal with the banks on foot of the arrangement will be expected to pass the benefit on to their tenants. I reiterated this in the Dáil on 30 April last.

While commercial leases are primarily a contractual matter for the tenant and the landlord, the Government has urged landlords to demonstrate forbearance in these extraordinary times and to play their part, as everyone must, in helping the country through this difficult period. I would encourage tenants and landlords to engage with each other on this matter and come to some arrangement as it is in everybody’s interest that terms are amicably agreed.

I have asked my officials to raise the matter of commercial rents and leases across a number of Government Departments. An initial inter-departmental discussion has already taken place and I understand further engagement is underway with a range of stakeholders, including groups representing businesses and landlords, to gain additional insights and gather intelligence to inform any further discussions. I have also asked my officials to look into the different responses from other countries and to identify possible options for supports.

While different options are being explored, I would point out that any support to business in respect of rents alone would ultimately end up as a support to the landlord. Not only would it be difficult to estimate the costs involved for such a scheme, but the offering of support, or even the perception that such supports will be forthcoming, may affect the market and lessen the impetus for landlords to renegotiate with tenants.

The matter of legal protections for businesses who are unable to pay their commercial rents has been raised with the Attorney General. Specifically, I asked about the potential for legislation to prevent the eviction of commercial tenants who have failed to pay rent as a result of the pandemic and the possibility of legislating to place a moratorium on businesses having to pay rent for premises they cannot used due to the restrictions imposed by Government. I have just received a response in which the Attorney General advises that there are significant legal difficulties in respect to both of the questions posed. The difficulties stem from a variety of legal bases including statutory, constitutional, contract and common law. I have asked my officials to consider the advice.

The Government is committed to ensuring as many businesses as possible survive this challenging period, and it will continue to look at how we can support businesses that have been impacted by the COVID-19 crisis. I would like to point out that, on 2 May, the Government announced an additional suite of measures to further support small, medium and larger business that have been negatively impacted by Covid-19. These included:

- A €10,000 restart grant for micro and small businesses based on a rates waiver/rebate from 2019;

- A three-month commercial rates waiver for impacted businesses;

- A €2 billion COVID-19 Credit Guarantee Scheme to support lending to SMEs for terms ranging from 3 months to 6 years, which will be below market interest rates;

- A €2 billion Pandemic Stabilisation and Recovery Fund within the Ireland Strategic Investment Fund (ISIF), which will make capital available to medium and large enterprises on commercial terms; and

- The ‘warehousing’ of tax liabilities for a period of twelve months after recommencement of trading during which time there will be no debt enforcement action taken by Revenue and no interest charge accruing in respect of the warehoused debt.

These supports acknowledge that impacted businesses need time and space to restructure and resume activity, without the added pressures of trying to repay legacy debts, such as commercial rents, when revenues are just beginning to return.

Further information on all of these and additional Government supports for COVID-19 impacted businesses can be found at www.gov.ie or on my Department’s website (https://dbei.gov.ie/en/What-We-Do/Supports-for-SMEs/COVID-19-supports/ ).