Nama reduced rents in 99% of 2011 applications

THE NATIONAL Asset Management Agency approved 113 of 114 applications for rental reductions sought by tenants of Nama debtors last year, Minister for Finance Michael Noonan has confirmed.

Last December, Nama issued a guidance note on upward-only commercial leases, following Mr Noonan’s announcement that the Government had abandoned plans to scrap upward-only rent reviews.

Mr Noonan said 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”.

Mr Noonan said the note covered situations where tenants of Nama debtors could show the rents they were paying were in excess of current market levels and, as a result, the viability of their businesses was threatened.

“In such circumstances, tenants were given an opportunity to seek Nama’s approval for rent reductions,” said the Minister.

In a written Dáil response to Fianna Fáil’s finance spokesman Michael McGrath, Mr Noonan said: “Nama points out that, prior to issuing the guidance note, it had received and approved a substantial number of applications for rent abatements which it had processed on an informal basis.

“I am advised by Nama that, in 2011 prior to the issuing of the guidance note, it received 114 direct applications for rent abatement. Nama states that 113 of these applications were approved and one was refused.”

He added: “I am further advised that, since December 6th, 2011, Nama has received 40 applications for rent abatements under the terms of the guidance note. Five of these . . . were approved. Another two were ineligible as they related to properties which are not held as security by Nama.”

Mr Noonan said: “As regards the remaining 33 cases, the applications are currently under review. In the majority of these cases, Nama has, as per the guidance note, facilitated direct discussion between the landlord and the tenant and is awaiting the outcome of these discussions.

“In some of the cases, it is awaiting receipt of additional information from tenants.On receipt of the necessary information by Nama, I am advised that the average turnaround time for decisions in respect of applications is six days and that the Agency works to a turnaround target of seven days.According to Nama’s guidance note, its portfolio includes loans on Irish investment property valued at €9.25 billion.

It states: “Nama does not have direct ownership of this property and therefore cannot of its own volition effect a rent review process or reduction in rent.”

Nama pointed out that its guidance note “is designed to facilitate a mutually agreeable process where the landlord owning the property (albeit as security for a Nama loan) and the tenant”.

“In making decisions under this guidance note, Nama will have regard to its statutory obligation to protect and enhance the value of the loans acquired by it so that it obtains the best achievable financial return for the Irish taxpayer,” the agency said.