COVID-19: Irish Government real estate interventions
COVID-19: Irish Government real estate interventions
The main statutory interventions in the context of real estate have been in relation to residential property. However ambiguity has been caused in the context of commercial tenancies by late amendments to the Emergency Measures in the Public Interest (COVID-19) Act 2020 (the Act), giving rise to uncertainty as to whether a landlord can forfeit such tenancies during the current crisis.
Supports for residential tenants
The Act has introduced the concept of an "emergency period" during which certain supports have been extended to residential tenants. This emergency period commenced on 27 March 2020 and has been extended by Government order to expire on 20 July 2020. This period may be further extended if deemed it necessary.
The supports introduced are as follows:
Landlords are not permitted to increase the amount of rent payable during this period. All notices of rent increase, which were served before the emergency period and were due to take effect during the emergency period, are paused.
No changes have been introduced with regard to the underlying obligation of the tenant to pay rent - tenants are obliged to continue to pay rent during the emergency period.
Security of tenure
With effect from Friday 27 March 2020, tenants cannot be forced to leave their rental accommodation during the COVID-19 emergency period.
Landlords are prohibited from serving notices of termination during the emergency period.
All notices of termination which were served prior to the emergency period are paused and tenants, in general, cannot be made to leave their rented accommodation during this time. If a notice was served before 27 March 2020, any day that falls within the emergency period does not count towards the notice period. By way of example, a tenant with two months of their notice period remaining on 27 March 2020 will now still have a two month notice period remaining at the end of the emergency period.
The sole exception to the moratorium on terminations is where a notice of termination was served on the grounds of tenant breach of his/her obligations under the lease and that breach has been confirmed by the Residential Tenancies Board (RTB) through a determination order. A late amendment made to the Act, stating that "all proposed evictions in all tenancies in the State" are prohibited for the duration of the emergency legislation, has cast some doubt as to whether even the limited grounds setting out exception to the moratorium can now be relied upon by Landlords.
For tenancies of less than 6 months' duration, a tenant now has 28 days (increased from 14) from receipt of a rent arrears warning from a landlord to pay overdue rent. This change is intended to allow time for the tenant to arrange for income support to be put in place.
Tenants whose tenancies have been validly terminated but who remained in occupation up to 27 March 2020 (whether or not with the consent of the landlord) may remain in their accommodation, while continuing to pay rent and observe all other terms and conditions of their lease. However, where the RTB determines a dispute in favour of the landlord, a termination may take place.
Both landlords and tenants of residential properties should be aware that certain income support measures have been introduced by the Irish Government to help those who have seen their salaries reduced or employment terminated. Those measures include changes in the entitlement to illness benefit, a Supplementary Welfare Allowance and Temporary Wage Subsidy Scheme. The details of those measures are outside of the scope of this note, however it should be borne in mind that Rent Supplement is also available to tenants financially affected by the crisis.
The new income support approaches mentioned above complement the existing Rent Supplement scheme, which is also available to those affected.
Rent Supplement is a means-tested payment for certain people living in private rented accommodation who cannot provide for the cost of their accommodation from their own resources. It is available as a short-term income support to those in the private rented sector.
The Department of Employment Affairs and Social Protection has advised that, in view of the difficulties created for many in the private rented sector who have lost significant employment income, it will "use the full flexibility of the scheme to provide the necessary support".
Supports for commercial tenants
To date, the Irish Government has done very little to interfere in the operation of commercial tenancies, which continue to be governed by the terms of the lease. However, it is important for parties to commercial leases to be aware of the following:
The late amendment made to the Act which resulted in the provision that "all proposed evictions in all tenancies in the State" are prohibited for the duration of the emergency legislation has cast some doubt over the position regarding the forfeiture of commercial leases.
While the wording lacks clarity, and we do not believe that it was an intended consequence, the conservative view must be that the forfeiture of commercial leases is for the time being prohibited.
The Irish Government agreed with local authorities on 20 March that they should defer rates payments due from those businesses most immediately impacted by the COVID-19 emergency until the end of May 2020.
However, on 2 May 2020 the Government announced a range of measures to support businesses impacted by COVID-19. Included in these measures is a full waiver of commercial rates for the 3 month period starting on 27 March 2020.
This waiver scheme appears to be for the benefit of those businesses forced to close due to public health requirements. However, at the time of publishing this note, no further information has been provided by the Government with regard to how the scheme is to operate in practice.
Closure of premises
The Government, following the introduction of the Health (Preservation and Protection and other Emergency Measures in the Public Interest) Act 2020, may order the closure of buildings by way of statutory order. To date, the Irish Government's approach has been to handle the crisis by means of strong recommendations to both the public and commercial enterprises, rather than introducing any such order or statutory regulations. As of 29 June 2020, the previously recommended closures have been lifted for the majority of retail and leisure facilities. The position will remain under review by both public health officials and Government.
Businesses operating in the property sector may also find our recent summary of the Irish Government's new banking measures and our update on the Irish Planning System of interest.
If you have any queries or would like to discuss any points raised in this update then please feel free to get in touch with your usual A&L Goodbody Commercial Property contact.