Tenants in apartments whose sale was reportedly sought by a US vulture fund no longer face the loss of their homes after their landlord withdrew termination notices on Friday.
Sova Ltd, part of property developer Lalco, has written to tenants in the Strand apartment block in Limerick withdrawing notices asking them to leave their homes in coming months.
The letter, sent on Friday afternoon to the 16 tenants affected, states that Sova has decided to “withdraw all termination notices that are currently outstanding in respect of tenants at the Strand apartments in Limerick city, including yours”.
The company had been planning to sell the apartments to aid it in clearing its debt to US fund, Oaktree Capital, which bought the loan from Nama last July.
Lalco owed its banks about €500 million when the property market crashed nine years ago.
A statement from Sova earlier this week indicated that it had issued the termination notices with Oaktree’s approval. The US fund has also agreed that the company should withdraw the termination notices to the tenants.
Sova’s letter states that it is “fully committed” to respecting new laws bolstering tenants’ rights that are due to come into force shortly. The Planning and Development (Housing) Residential Tenancies Act, 2016, will protect renters in situations where landlords sell their homes.
Minister for Housing Simon Coveney welcomed the decision by Sova to provide "an important reassurance for households who had been facing significant uncertainty.
“There was no legal requirement for Sova to take this approach so I commend them for doing what was the socially responsible thing,” he said.
Tenants received notices to quit their apartments in November and December, but were given several months to actually leave the properties. However, the timing sparked speculation that the move was designed to avoid the obligations that the new law would impose on landlords.
It is understood that Lalco directors, developers John Lally and Paul Higgins, gave committments to Mr Coveney that the group would respect the letter and the spirit of the new law.
Oaktree said earlier in the week that it only owned the debt secured on the apartments and did not have the right to “give instructions to tenants with regard to lease agreements”.
The US company acquired debts secured on 950 apartments in Cork, Dublin, Galway and Limerick, as well as a large number of commerical properties, when it bought a package of property loans that included Lalco’s from Nama last year for a reported €800 million.
Sova said that the debt secured on the Strand far outweighed the value of the properties themselves, effectively meaning that it did not own them. As a result, it could not take any steps regarding the apartments’ ownership without Oaktree’s approval.
Last July’s deal with Nama gave Oaktree the right to seek full repayment of the debts involved or appoint receivers where those that owed the money could not meet their liabilities or come to an agreement with the company.
