Amid the much anticipated austerity measures in Budget 2012 were significant provisions to re-activate Ireland's property market. The Minister for Finance announced:
That the Irish Government's proposal to abolish upwards only rent review provisions in existing commercial leases has been dropped; That stamp duty on non-residential property has been reduced to a flat rate of 2%; Capital Gains Tax relief for property purchased prior to the end of 2013; and Mortgage Interest Relief is available as an incentive for purchase of homes in 2012. Upwards only rent reviews In response to the hardship being faced by many tenants since the beginning of the economic downturn, and strong lobbying from the retail sector in particular, legislation was enacted in 2009 that prohibited upwards only rent review provisions in commercial leases granted after 28 February 2010. When the current Government took office it gave a commitment to retrospectively abolish upwards only rent review provisions in leases granted prior to that date. This commitment introduced considerable uncertainty into the property market, with the result that trade in investment property all but ceased, even in relation to prime assets with strong covenants.
From the outset there were questions raised as to whether legislation to retrospectively abolish upwards only rent reviews would be in conflict with the Constitution. The Government has now been advised that it would be extremely difficult for any such legislation to survive a Constitutional challenge. Following the Minister's confirmation in Budget 2012 that there will now be no retrospective statutory intervention in the rent review provisions of existing leases, it is anticipated that the excellent opportunities presented in the Irish property market will be availed of by both indigenous and foreign institutions and investors.
Stamp Duty The reduction in...