by Fiona Shipsey , Fiona Shipsey December-15-2020 in Property, COVID-19

We usually like to look back around this time of year to what has happened in the property market in the last 12 months. None of us could have foreseen the unprecedented disruption of Covid-19; changing the way we live and work and how we interact with each other. We have therefore set out below some of the main updates in the Property sector over the past year which were never on the agenda but have gained significant importance and which will hopefully benefit those interacting in the property market.


COVID-19 and Commercial Leases

The pandemic has had an unprecedented effect on the property market, particularly its effect on commercial leases within the retail, food and beverage and leisure markets.  At this stage, both landlords and tenants alike will be very familiar with the government guidelines in enforcing and lifting restrictions and dealing with the closure and re-opening of their premises. All parties should always consult government guidelines, their insurance policies and their leases to ensure that compliance is maintained during this difficult period.

In the drafting of commercial leases, neither landlords nor tenants foresaw the consequences of a global pandemic such as COVID-19 and as a result leases drafted to date do not allow for nor have they been designed to take this sort of scenario into account. A “pandemic” type clause is now becoming the most negotiated clause in new lease arrangements particularly in the retail, food and beverage and leisure industries.

To facilitate negotiations between landlords and tenants affected by Covid 19 the Code of Conduct between Landlords and Tenants for Commercial Rents (the “Code”) was introduced on 01 October 2020 and will be in place until 31 July 2021 with the possibility of extension if necessary. While not legally binding or enforceable, the Code is voluntary with its main purpose to encourage negotiations between the parties expeditiously in a swift and transparent manner, to assist the parties where State reliefs are available, collaboration where the parties are to assist each other in dealing with third party organisations and mediation such that the parties should consider the alternative dispute resolution clauses under the lease where negotiations break down. While the Code does not intend to deem infective forfeiture clauses under a lease for non-payment of rent, it does place an obligation on landlords to engage with a tenant through investigating the tenant’s financial status by financial accounts and other financial documents.  Likewise, it places an obligation on the tenant to proactively engage with a landlord regarding its financial status and its ability to discharge the rent under the lease.  Of note, the Code only relates to the payment of rent while insurance premiums and service charges are to be discharged in full during the period,


COVID-19 and Residential Tenancies

A number of temporary laws were introduced this year in order to protect residential tenants from eviction from their homes which are as follows;

  • The Emergency Measures in the Public Interest (COVID-19) Act 2020 was enacted in March 2020 with its provisions ending in August 2020.
  • The Residential Tenancies and Valuation Act 2020 was enacted in August 2020 and dealt with notices of termination for rent arrears and rent increases. The provisions of this Act will operate until 10 January 2021.
  • The Residential Tenancies Act 2020 was enacted in October 2020 and will continue to have affect for any period during which a 5 kilometre restriction on movement is in place (i.e. any future Level 5 restrictions). This Act prevents residential notices of termination from taking effect during the Level 5 period plus a further 10-day period following the lifting of restrictions. Whilst the Act does not prevent notices being served, it prevents the eviction actually occurring during this time period. This prohibition will not apply in certain excepted circumstances such as anti-social behaviour.


Budget 2021

Budget 2021 saw the Government introduce a number of changes to the property market, mostly due to the impact of COVID-19 on the sector:

  • Social Housing: a €3.1 billion housing budget was announced by the government, making Budget 2021 the largest social housing build programme in the history of the State. A particular emphasis will be placed on Approved Housing Bodies.
  • Help to Buy scheme: this Scheme was introduced in 2017 to assist first-time buyers with obtaining their deposit when purchasing a new build. It provides relief to first-time buyers in the form of a rebate of income tax. The Scheme was due to expire at the end of this year but has been extended until the end of 2021.
  • Stamp duty refund scheme on land purchases: this residential property development scheme had required that development commence before 31 December 2021 and be completed within two years. This was extended under the Budget to include developments commencing before 31 December 2022 and the time period for completion of the development was increased by 6 months to two years and six months.
  • Commercial Rates: in May 2020 a three-month waiver on commercial rates had been introduced for businesses who were forced to close due to the COVID-19 restrictions. This has since been extended under the Budget to allow for the waiver to continue until the end of 2020 and also extended those eligible for the waiver.


Local Property Tax

The Local Property Tax liability valuation date was due to be updated on 1 November 2016, 1 November 2019 and more recently 1 November 2020 however the Minister for Finance announced this year that the Local Property Tax liability revaluation date will be deferred now to 1 November 2021. For homeowners, particularly those who are currently exempt from having to pay LPT, this is good news and gives relief for at least another year.


Brexit

Perhaps unsurprisingly Brexit negotiations continue although time is fast running out and we would hope that a successful deal can be agreed upon shortly to bring an end to the uncertainty that this too has placed on our clients’ businesses over the last few years.


Summary

As the year that will never be forgotten draws to a close, we hope that the unprecedented measures, both commercial and residential, introduced by the Government have helped to somewhat ease the strain this pandemic has placed on the property market. No doubt the Government's attention will be firmly on the target of additional housing through increased social housing, new homes and enhanced tenancy protections, with the objective of increased supply and affordability in the hope of boosting the market. We are hopeful for a busy 2021 for all of our clients within the property sector and look forward to assisting them with any of the challenges that lie ahead.

For further information or to discuss any of the topics raised, please contact Fiona Shipsey fshipsey@hayes-solicitors.ie or any member of the Property Team at Hayes solicitors. 

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About the Authors

Fiona Shipsey
Fiona Shipsey

Fiona is a partner in the Property team at Hayes solicitors. She acts for clients in the purchase, sale, mortgaging and refinancing of both residential and commercial properties. She has particular expertise in advising receivers and banks in the sale of distressed properties.

Fiona Shipsey
Fiona Shipsey

Fiona is a partner in the Property team at Hayes solicitors. She acts for clients in the purchase, sale, mortgaging and refinancing of both residential and commercial properties. She has particular expertise in advising receivers and banks in the sale of distressed properties.