Dáil Éireann Debate, Wednesday - 27 May 2020
482. Deputy Holly Cairns asked the Minister for Business, Enterprise and Innovation her views on establishing a rental support scheme for small and medium-sized enterprises adversely affected by the Covid-19 emergency similar to that provided to private home renters. [8200/20]
View answerThe issues businesses are facing in respect of commercial rents has 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 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 18th 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 30th 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 received a response on 13th May 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 2nd 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 (see further information below);
- 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.
The issue of supporting fixed costs, including commercial rents, was very much to the fore of our minds when the Government recently introduced the Restart Grant which will give direct grant aid to micro and small businesses to help them with the costs associated with re-opening and re-employing workers following COVID-19 closures. This grant will provide funding to enable small and micro business reconnect with their employees and customer base by helping to defray ongoing fixed costs and the costs, such as PPE, associated with re-launching the business.
The Grant will be available to businesses with a turnover of less than €5m and employing 50 people or less, which were closed or impacted by at least a 25% reduction in turnover out to 30th June 2020. It is a contribution towards the cost of re-opening or keeping a business operational and re-connecting with employees and customers. The grants will be equivalent to the rates bill of the business in 2019, with a minimum payment of €2,000 and a maximum payment of €10,000.
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/).
