The National Asset Management Agency has published details of how it approves rent reductions where the viability of businesses is threatened.
The publication followed the announcement by the Minister for Finance Michael Noonan that the Government had abandoned plans to scrap upward-only rent reviews.
Mr Noonan said that it had “not proved possible to develop a targeted scheme” to tackle upward-only rent reviews that would “not be vulnerable to legal challenge or require compensation to be paid to landlords”.
This was despite “exhaustive work” over the past few months by Minister for Justice Alan Shatter, including the preparation of draft legislation, said Mr Noonan.
NAMA published its “policy guidance” showing how it approved rent reductions “where it can be shown that rents are in excess of the current market levels and viability is threatened”, he said.
“The policy also provides for the appointment of an independent valuation of market rent where necessary,” said Mr Noonan.
“NAMA have also advised me that where a tenant is not getting satisfaction in negotiations with his Nama landlord he can contact NAMA directly and they assure us that any queries will be dealt with speedily by them.”
The State loans agency, set up to purge the banks of their most toxic loans by purchasing them at a discount, said that it has loans secured on €9.25 billion of investment property in Ireland.
NAMA said in a guidance note that it can only approve rent reductions where tenants agreed a lease of a business premises prior to February 28th, 2010.
The policy is designed to allow landlords and tenants agreed rent reductions where the tenant is “due to economic conditions and through no fault of his own, financial distressed” and a reduction will ensure the survival of the company and the maintenance of jobs.
Mr Noonan plans to appoint a group to advise him on “NAMA’s strategy and its capacity to deliver on that strategy through property disposal and the ongoing management of assets”.
Michael Geoghegan, the former chief executive of HSBC who carried out a private review of NAMA in October, will chair this group.
Mr Noonan said that the review was “generally positive” of NAMA but that he was setting up the group arising from his work.
The group will also make recommendations on new appointments to the NAMA board, help “identify candidates with entrepreneurial and property skills” and strategies to attract international investment into Ireland, Mr Noonan said.
The group will also provide the Minister with advice on “lessons to be learned from asset management agencies in other countries”.
The Minister said he planned to issue a direction order under the 2009 NAMA legislation to establish the group and compel NAMA to facilitate its work.