Real Estate Comparative Guide -

1 Legal framework

1.1 What legislation governs real estate in your jurisdiction?

The key pieces of legislation which govern real estate transactions in Ireland are:

the Land and Conveyancing Law Reform Act 2009;
the Registration of Title Act 1964;
the Registration of Deeds and Title Act 2006;
the Landlord and Tenant Acts 1967–2019; and
the Residential Tenancies Acts 2004–2020.

1.2 What special regimes apply to different types of real estate?

Residential property is governed by the Residential Tenancies Acts. Where the residential property in question is also a family home or a shared home, the Family Home Protection Act 1976 and the Civil Partnership and Certain Rights and Obligations of Cohabitants Act 2010 also apply.

Both residential property and commercial property are governed by the Land and Conveyancing Law Reform Act; and commercial property which is subject to occupational leases is governed by the Landlord and Tenant Acts.

2 Ownership

2.1 What types of ownership rights exist in your jurisdiction?

Real estate in Ireland may be held as either freehold title or leasehold title. A freehold owner is entitled to a property absolutely; in contrast, a leasehold owner is entitled to ownership of that property for the term of years granted by the relevant lease. Leasehold title is based on the contractual relationship between the lessor (the freehold owner) and the lessee (the leasehold owner).

2.2 What ownership structures are commonly used in your jurisdiction?

Investors in Irish real estate use a variety of different structures to acquire property. Both Irish companies and non-Irish companies are utilised, as well as real estate investment trusts, Irish regulated funds and Irish regulated partnerships.

Historically an Irish regulated fund, such as an Irish collective asset management vehicle, has been the most popular form for institutional investors. However, due to recent tax changes, this has been less favoured in the last two years. International investors also use non-Irish resident companies (eg, Luxembourg companies).

2.3 Are there any restrictions on real estate ownership in your jurisdiction?

There are no restrictions on real estate ownership in Ireland. All investors must comply with anti-money laundering legislation and provide ‘know your client' documentation. The source of acquisition funds and ability to fund the transaction will also need to be proved by an investor.

2.4 Is ownership of land and buildings constructed thereon legally separable?

Typically, the owner of land is also the owner of any buildings constructed on that land. No distinction is made between the ownership of land and the ownership of buildings in circumstances where they are owned by the same person or entity.

2.5 What security interests can attach to real estate? How are they prioritised?

Typically, a lender will require a debenture, comprising a fixed charge over the real estate and any book debts of the borrower entity, as well as various security assignments, charges over any rent accounts and a floating charge if the borrower is a corporate entity.

Registration of security affecting real estate must be registered in either the Registry of Deeds (where the title to the property is unregistered) or the Land Registry (where title to the property is registered) in order to obtain priority in relation to that security. Security is prioritised in the Registry of Deeds and in the Land Registry based on the date of registration of that security. In certain circumstances where a charge is registered in the Land Registry, but another security interest which post-dates the date of that charge is registered in advance, an application can be made to the Land Registry to reverse the priority of these security interests.

3 Registration

3.1 What body administers the land register in your jurisdiction?

The Property Registration Authority administers the land register in Ireland and manages and controls both the Registry of Deeds and the Land Registry. It also promotes the registration of ownership of real estate in Ireland.

The Land Registry was established in 1892. When ownership is registered in the Land Registry, the deeds are lodged with the Land Registry and particulars in relation to the property and its ownership are entered on a folio which forms the register maintained by the Land Registry. The Land Registry also maintains maps (referred to as ‘filed plans') in relation to each property. Both folios and maps are maintained in electronic form. A title registered in the Land Registry is guaranteed by the state; however, this guarantee does not extend to the filed plan or the boundaries outlined on the filed plan. As a result of the state guarantee, a buyer can accept the folio as evidence of title without having to read the underlying title deeds. Property registered in the Land Registry is referred to as ‘registered property'.

The Registry of Deeds was established in 1707 to provide a system of voluntary registration for deeds affecting real estate and to give priority to registered deeds over unregistered but registrable deeds. There is no statutory requirement to register a document in the Registry of Deeds, but failure to do so may result in a loss of priority. The effect of registration is to govern priorities between documents which relate to the same property. The registration of a deed in the Registry of Deeds alone is not proof of ownership; and in contrast to registered property, the underlying title of unregistered property registered in the Registry of Deeds must be fully investigated in order to determine ownership and to ascertain whether a property has a ‘good and marketable' title.

3.2 Is registration of real estate rights, transactions and encumbrances mandatory? What are the consequences of failure to register?

Yes, any unregistered property (Registry of Deeds) acquired in Ireland after 1 June 2011 is subject to compulsory first registration in the Land Registry. The Registration of Title Act provides that where a property is subject to compulsory first registration, a purchaser shall not acquire the estate or interest purported to be assured unless an application for first registration is lodged with the Land Registry within six months of the assurance. In practice, the Land Registry does not enforce this, and applications are generally accepted and title registered even where the application is lodged after the six-month time period.

While there are no time limits imposed on registration of a deed in the Land Registry in practice, this is done as soon as possible in order to ensure that the owner's title is registered promptly and to ensure priority.

Some burdens and encumbrances affect registered land without the necessity for registration – for example, a lease for under 21 years, rights of the public and the rights of individuals in actual occupation of land. Such burdens are known as ‘Section 72 burdens'. as they are dealt with under Section 72 of the Registration of Title Act. All other burdens should be registered in the Land Registry as burdens which are registered have priority over burdens which are not registered. This is the case even where the burdens which have not been registered pre-date the registered burdens. Furthermore, unregistered but registerable burdens will not be protected against a bona fide purchaser for value without notice of those burdens.

3.3 What are the formal and documentary requirements for registration?

All documents submitted to the Registry of Deeds and/or the Land Registry to prove title must be original and contain wet-ink signatures. Neither the Registry of Deeds nor the Land Registry accepts electronic signatures. Documents must be executed correctly – for example, where a foreign entity executes a document, the Land Registry has certain proofs which must also be lodged to verify the due execution by the foreign entity of the document in question. Searches against the property and against the vendor and purchaser must also be lodged.

3.4 What is the process for registration?

The process for registration in the Registry of Deeds is straightforward, as the Registry of Deeds does not investigate title; it merely records the existence of a deed and registration in the Registry of Deeds governs priority. The process in the Land Registry can be more time consuming, as the Land Registry investigates title and will register ownership of a property with absolute title only where it is satisfied with the documents and proofs lodged. The Land Registry may raise queries on an application and these queries must all be dealt with by the lodging solicitor before the application can complete.

3.5 Is registered information publicly accessible?

Copies of folios and filed plans are publicly available from the Land Registry, and copy memorials (which consist of copies of the application forms submitted to the Registry of Deeds) are publicly available from the Registry of Deeds. Copies of the underlying title deeds lodged in the Land Registry are made available only to individuals with an interest in the property – that is, the owner or the charge holder or where the consent of the owner has been obtained.

4 Commercial leases

4.1 What types of commercial leases exist in your jurisdiction?

Commercial leases are usually categorised as either short term or long term. A short-term lease has a term of up to five years and a long-term lease generally has a term of between 10 and 25 years. The majority of commercial leases in Ireland are also full repairing and insuring (FRI) leases. The obligations on a tenant in an FRI lease in relation to the repair and maintenance of the demised premises are extensive. Either these obligations are dealt with by a direct covenant in the lease to keep the demised premises in good repair; or where the demised premises forms part of a larger building or development, the tenant may be obliged to contribute towards the cost of repair incurred by the landlord by paying a service charge. Usually, a landlord insures the demised premises recoups this cost from the tenant by charging insurance rent.

4.2 Are the terms of a commercial lease regulated or freely negotiable? What do they typically cover (eg, duration; security deposit; rent; sub-letting; termination)?

The terms of a commercial lease are freely negotiable between the parties, subject to certain statutory restrictions. For example, since 2010, a rent review clause in a commercial lease must be on an upwards or downwards basis, and may not be upwards only; and a covenant restricting the change of user in a lease may not be an absolute prohibition, but should be read as if it the change of user was subject to the landlord's consent.

A commercial lease typically covers all commercial agreements between the parties, including:

the term (ie, the duration) of the lease;
details of any break options (ie, options to terminate the lease prior to the expiry of the term);
the rent and other payments due under the lease;
any rent deposits payable;
the covenants on behalf of the tenant (eg, in relation to payments, compliance with statutory obligations, repair, alterations and alienation); and
any other items specifically negotiated between the parties.

4.3 What are the formal and documentary requirements for conclusion of a commercial lease?

Commercial leases should be executed as deeds and the specific execution requirements for the parties entering the lease will need to be followed in order for the lease to be validly executed. Generally, Irish companies executing a deed require it to be signed by either two directors or one director and the company secretary, and for the company seal to be affixed. However, a company may alter its execution requirements, so the constitutional documents should always be checked to verify execution. In order for an individual to execute a deed, he or she must sign the deed in the presence of a witness and the witness must also sign the deed to attest to the signature of the individual. The witness should be physically present when the individual executes the deed.

4.4 What is the process for concluding a commercial lease?

Once the lease documents are in agreed form, the landlord will usually inform the tenant of the payments due on completion and the documents will be executed by both parties, dated and exchanged. Stamp duty is generally payable on commercial leases at a rate of 1% of the average annual rent.

4.5 What are the respective obligations and liabilities of landlord and tenant under a commercial lease, and what are the consequences of any breach?

The obligations and liabilities of a landlord and tenant under a commercial lease vary depending on the terms of the lease itself. Generally speaking, a tenant will have numerous obligations, including in relation to:

payment of rent, insurance rent and service charge;
repair, alterations and alienation;
compliance with statutory obligations; and
notices.

A landlord usually has an obligation to:

insure the demised premises;
provide the tenant with quiet enjoyment of the demised premises; and
in some instances, provide services.

Commercial leases in Ireland usually contain a forfeiture clause which enables a landlord to re-enter a premises and take back possession should a tenant breach its covenants under the lease. Forfeiture is an equitable remedy and a landlord should always be advised to act reasonably when considering forfeiting a lease. This is particularly the case in the current circumstances, as it is likely that a court will be sympathetic to a tenant who is in difficulty and has breached a covenant under a lease (eg, the covenant to pay rent) due to COVID-19. In addition, either party may sue the other for breach of a covenant under the lease.

4.6 How are rent variations typically effected throughout the term of the lease?

A commercial lease for a term in excess of five years usually contains rent review provisions. These provisions may provide that the rent is reviewed to ‘open market rent' every five years; or alternatively, the provisions may be linked to changes in the Consumer Price Index. Prior to the commencement of the Land and Conveyancing Law Reform Act, a lease could provide for ‘upwards only' rent review provisions; however, the Land and Conveyancing Law Reform Act has amended this position and rent review provisions in a commercial lease may now be on an upwards or downwards basis. On the completion of a rent review, the parties should record the reviewed rent in a rent review memorandum, which should be kept with the lease documents.

4.7 What taxes are levied on rental income?

Stamp duty is generally payable on commercial leases at a rate of 1% of the average annual rent. It is the tenant's obligation to pay the stamp duty. A landlord may also opt to tax a commercial lease and charge value added tax on the rental income; however, it is not obliged to do this. Rental income is also subject to Irish tax, depending on the ownership. Taxable Irish companies are taxed at 25%, whereas non-resident companies are generally subject to income tax at 20%.

4.8 Can a commercial lease be triple net?

Yes, the terms of a commercial lease are freely negotiable between the parties. As outlined in question 4.1, generally speaking, tenants are liable to pay all costs associated with repair and insurance relating to a commercial lease, as well as the rent payments and outgoings in relation to the use by the tenant of the demised premises. A tenant will usually be responsible for paying any rates or charges relating to the demised premises, such as commercial rates.

4.9 How are landlord and tenant disputes typically resolved?

Usually, an attempt will be made to resolve any landlord and tenant disputes between the parties without recourse to court. Where this is not possible, landlord and tenant disputes will be heard by a court and issues determined by the judge. It is also common for disputes in relation to particular items such as rent reviews to be determined by either an arbitrator or an expert such as an independent accountant or surveyor. Parties may also choose mediation as an alternative dispute resolution process.

4.10 What types of guarantees are market practice and required by landlords to secure the tenant's obligations

Where the strength of a tenant's covenant is insufficient, a landlord may seek a guarantee or alternatively may seek a rent deposit. The terms of a guarantee are freely negotiable; however, the guarantee will usually guarantee the obligations of the tenant under the lease and will be responsible for any missed rental or other payments by the tenant. The guarantee will be either for the term of the lease or for a specified duration; and where the tenant enters into an insolvency arrangement, the guarantor is obliged to take on the lease where the landlord requires it to do so.

5 Real estate transactions

5.1 What form do real estate transactions typically take in your jurisdiction?

Generally, an agent is appointed on behalf of a seller to market a property and a buyer will usually appoint an agent to act on its behalf also. Once a purchaser has been identified and the commercial terms of the transaction have been agreed, a heads of terms document is drafted by the seller's agent recording the agreement. Due diligence by the buyer's solicitors then commences; and an exclusivity agreement may be in place between the seller and the buyer for a certain period as the parties work towards executing a binding contract for sale in respect of the property. Once the contract for sale has been entered into, the parties will work towards completion and secure any necessary financing, as well as agreeing drafts of all completion documents.

Alternatively, real estate assets may also be acquired by way of a share purchase. Such a share purchase agreement will include warranties and indemnities in relation to the real estate being sold. Any disclosures which the seller needs to make in relation to the property warranties are set out in a disclosure letter which should be provided with the share purchase agreement.

5.2 Which players are typically involved in a real estate transaction in your jurisdiction?

As mentioned in question 5.1, usually both the seller and the buyer will each appoint an agent to act on their behalf to negotiate the commercial terms of a transaction. Solicitors will also be engaged by the seller and the buyer to carry out legal due diligence; and a surveyor will be appointed to carry out a physical inspection and survey of the property, including boundaries. Depending on the nature of the transaction, a planning consultant may be engaged to provide a report on the planning and building regulations status of the property; and an environmental expert may be engaged to provide an environmental report in respect of the property. Tax due diligence should also be carried out and tax advisers may be asked to advise on the structure of the transaction to ensure that it is as tax efficient as possible.

5.3 Is the seller bound by a duty to disclose? What representations and warranties will it typically make?

The Law Society of Ireland produces a pro forma contract for sale which is designed to achieve a fair balance between sellers and buyers. The contract for sale contains General Conditions, the current version of which are the 2019 General Conditions. These General Conditions include various warranties in respect of the property on behalf of the seller in relation to items such as:

compliance with planning laws and the building regulations;
the disclosure of notices;
the identity of the property;
the state and condition of the property; and
any easements affecting the property.

The warranties contained in the General Conditions may be excluded or amended only by inserting a special condition into the contract for sale, and both parties must agree to the special condition. A seller will usually attempt to limit the warranties being provided in a commercial transaction by inserting numerous special conditions into the contract for sale, particularly where a property is being sold by a receiver or mortgagee in an enforcement scenario.

The principle of caveat emptor (buyer beware) applies in relation to property transactions, and a buyer should carry out all necessary due diligence and satisfy itself in advance of signing the contract for sale. However, a seller may be liable for misrepresentation and General Condition 29 provides that a buyer will be entitled to compensation where it has suffered loss as a result of an error made by the seller, which includes any non-disclosure, misstatement, omission or misrepresentation made in a contract for sale. As with all General Conditions, General Condition 29 may also be excluded or amended by a seller by way of special condition, and in these circumstances the buyer will not be entitled to compensation for loss arising as a result of representations made by the seller.

5.4 What due diligence is typically conducted in a real estate transaction?

Due diligence in a real estate transaction normally involves the following:

legal due diligence consisting of the investigation of the seller's title to ensure the buyer will acquire a good marketable title;
searches against the seller and the property;
explanation and/or discharge of all acts appearing on searches which affect the seller and/or the property;
due diligence on the value added tax (VAT) profile of the property and an assessment of the application of Irish tax law to the acquisition of the property;
a physical survey of the property by an architect, engineer or surveyor;
planning and building regulations due diligence by a planning consultant; and
environmental due diligence where non-compliance with the environmental laws is a concern, as Ireland does not have a dedicated register of contaminated land.

5.5 What are the formal and documentary requirements for conclusion of a real estate transaction?

On completion of a real estate transaction, a deed of assurance is executed, dated and exchanged by the parties. The deed of assurance operates to transfer the property to the buyer and is subject to stamp duty. Once the deed has been stamped, it should be lodged for registration in the Registry of Deeds and/or the Land Registry as appropriate.

5.6 What is the process for concluding a real estate transaction? How long does this take? What costs are incurred?

Once the contract for sale has been exchanged and all completion documents and other completion items such as an apportionment account have been agreed, the parties may move towards completion. If the buyer is obtaining financing, the lender will also need to be satisfied with the title to the property and all conditions precedent of the lender will need to be complied with by the buyer in advance. The period between exchange of the contract for sale and completion will depend on the nature of the transaction and the timeframe agreed between the parties.

The buyer will need to pay the full agreed consideration in respect of the property and will also need to pay the fees of its various professional advisers. The seller will need to pay the fees of its professional advisers.

5.7 What are the respective obligations and liabilities of buyer and seller, and what are the consequences of any breach?

Once the contract for sale has been exchanged, the seller and the buyer must adhere to the conditions contained therein. If either party breaches its obligations under the contract for sale, the other party may sue for breach of contract.

5.8 What taxes are payable on a real estate transaction?

Stamp duty is payable on the acquisition of Irish real estate. It is charged on either the consideration payable for the property or the market value where the consideration payable does not reflect the market value of the property. A buyer is usually responsible for the payment of stamp duty, although in certain circumstances (eg, a voluntary conveyance) both parties may be liable. The rate of stamp duty in respect of commercial properties is 7.5%; and the rate for residential properties is 1% on consideration up to €1 million and 2% on any consideration over €1 million. Where non-residential property is transferred and is subsequently utilised for the construction of residential accommodation, a stamp duty refund is available, which effectively reduces the rate from 7.5% to 2%. Budget 2021 has extended the time allowed to commence construction work to avail of this refund to 31 December 2022. This scheme is subject to a number of conditions.

VAT may also be payable on the supply of property in a real estate transaction. A sale of real estate may attract VAT (the current rate is 13.5%) if has been developed. There are a range of exemptions from VAT.

A purchaser of Irish real estate may be obliged to withhold an amount in respect of capital gains tax from the consideration. The rate of withholding is 15% of the gross consideration. No withholding need be applied if the seller is exempt from capital gains tax or produces a withholding tax clearance certificate from the Irish Revenue Commissioners.

6 Real estate finance

6.1 Who are the most common providers of real estate finance in your jurisdiction? Do any restrictions apply in this regard?

The most common providers of real estate finance in Ireland are the domestic banks and alternative lenders. However, there has recently been an increase in the number of alternative non-bank lenders in the Irish market and many of these alternative lenders are domiciled outside of Ireland. Domestic banks are subject to regulation by the Central Bank of Ireland and as a result are less flexible than alternative lenders. As alternative lenders are not subject to these regulatory restraints, they generally have more of an appetite for risk. Alternative lenders may lend only to corporate entities and not to individuals, given their unregulated status. There are no restrictions on foreign lending for the acquisition of commercial real estate.

6.2 What forms of real estate finance are available in your jurisdiction?

A lender will generally provide finance secured over a real estate asset with the intention that the security be registered as first ranking in the Registry of Deeds or Land Registry, as appropriate. This usually takes the form of a debenture and incorporates both a fixed and a floating charge. Security over the shares of a corporate borrower may also be taken and a personal guarantee may be required depending on the circumstances.

6.3 What formal, documentary and other requirements do lenders typically require of borrowers?

A lender will carry out its own due diligence in relation to the real estate asset to ensure good title and satisfy itself that it is happy to lend on the basis of the title available.

Borrowers will need to:

comply with the know your customer and anti-money laundering requirements of the lender;
agree all security documents with the lender; and
fulfil all conditions precedent to the drawdown of the loan.

6.4 What type of security interests are typically required by lenders?

Lenders will generally require the following:

a debenture that incorporates a fixed charge over the real estate assets and any book debts of the borrower entity;
a security assignment of all material contracts relating to the real estate asset;
a charge over any rent accounts or other bank accounts relating to the real estate asset; and
a floating charge over all assets of the borrower entity, where the borrower is a corporate entity.

A lender will always want to ensure that its security is first ranking.

6.5 What is the process for obtaining real estate finance? What costs are payable?

The terms of the security package will need to be agreed between the lender and the borrower, as well as the general conditions to the loan and any special conditions. The security package is usually dictated by the lender, and the borrower will need to review and ensure it can comply with all items before agreeing to them. Typically, a borrower will be required to pay the legal costs of the lender and any other costs incurred by the lender – for example, relating to a valuation of the property. In terms of registration fees:

a fee of €40 is payable for registration of the security in the Irish Companies Registration Office;
a fee of €50 is payable for registration of security in the Registry of Deeds; and
a fee of €175 is payable for registration of security in the Land Registry.

6.6 How is security enforced in case of any breach?

A lender may appoint a receiver in case of breach of the security or an event of default. The provisions of the security document generally allow for the appointment of a receiver and the Land and Conveyancing Law Reform Act also provides for this. A receiver will take possession of the secured asset and market it with a view to securing a sale. The receiver acts as the agent of the borrower and has various duties, including a duty to obtain the best price reasonably possible for the asset. The sales proceeds will be used to discharge the borrower's indebtedness to the lender.

The High Court also has jurisdiction to appoint a receiver in certain circumstances. This may occur even where a breach of the security document has not occurred, but the secured asset is in jeopardy.

For security granted prior to the enactment of the Land and Conveyancing Law Reform Act, there was no requirement on a lender to take court proceedings to exercise its remedies in relation to that security, as long as the borrower did not challenge the enforcement of the security. The position has changed in relation to security granted on or after 1 December 2009, and now a lender must initiate court proceedings for an order for possession and an order for sale. These provisions can (and usually are) contracted out of in relation to security over commercial real estate. However, they cannot be contracted out of in respect of residential housing loans. Accordingly, in the case of security taken over residential property on or after 1 December 2009, a lender must initiate court proceedings in order to enforce that security. Court proceedings may be avoided only if the borrower provides written consent to the sale no more than seven days prior to the power of sale being exercised.

7 Real estate investment

7.1 Who are the most common investors in real estate in your jurisdiction? Do any restrictions apply in this regard?

Historically, the Irish real estate market was limited to domestic investors. However, since 2012, the main investors in the market have been from outside Ireland. While initially US investors were the most prominent, European and Asian funds have also become involved in the Irish real estate market more recently. There are no restrictions on foreign investors acquiring real estate in Ireland. All investors, including foreign investors, will need to comply with the anti-money laundering legislation by providing information to verify their identity and the source of funds.

7.2 What investment vehicles are typically used in your jurisdiction? What are the benefits and drawbacks of each?

Irish companies and non-Irish companies (eg, Luxembourg companies), as well as real estate investment trusts (REITs), are used by investors to acquire real estate assets in Ireland. In recent years, investors in the Irish real estate market have most commonly used Irish regulated funds (QIAIFs) to acquire Irish real estate. QIAIFs may be established as Irish collective asset-management vehicles (ICAVs), unit trusts, investment companies, common contractual funds or investment limited partnerships. The ICAV is the most popular corporate structure for a QIAIF investing in real estate.

Irish companies: The two most common forms of Irish companies used by investors to acquire real estate are a private limited company by shares (LTD) and a designated activity company (DAC). An LTD need not have any stated objects in its constitutional documents and has the capacity to undertake any activity without restriction. The members' liability in a LTD if the company is wound up is limited to the amount, if any, unpaid on the shares they hold.

The constitutional documents of a DAC set out its objects, and the DAC only has the power to undertake the activities as set out in its objects and is restricted in this way. The members of a DAC have liability with regard to both:

the amount, if any, that is unpaid on the shares they hold; and
the amount they have undertaken to contribute to the assets of the company, in the event that it is wound up.

Institutional investors may also use a public limited company (PLC). The liability of members in a PLC is limited to the amount unpaid (if any) on shares held by them. LTDs, DACs and PLCs are separate legal entities and have the capacity of a natural person, and may sue or be sued in their own names.

REITs: A REIT is a type of PLC which was introduced in 2013 specifically to deal with Irish real estate assets and to facilitate collective investment in Irish real estate. Provided that a REIT meets certain criteria, it will not be liable for corporation or income tax on its real estate profits or real estate rental income or capital gains tax on disposals of certain real estate assets. The Finance Act 2019 has limited the existing provision which allows a REIT to avoid any latent capital gains tax exposures when it ceases to be within the regime, so that the provision applies only where the REIT has been in operation for a minimum of 15 years.

Non-Irish companies – a Luxembourg company: International investors frequently use non-Irish companies such as Luxembourg companies to acquire real estate in Ireland. Luxembourg companies are generally used as they are tax efficient and offer flexible structures.

Irish regulated funds – the ICAV: As set out above, the ICAV is currently the most popular regulated fund vehicle for professional and high-net-worth real estate investments. The ICAV is a corporate vehicle similar to an investment company. The ICAV was specifically created for the Irish funds industry, making it a more flexible structure from a corporate law perspective. It is also a tax-efficient structure. An ICAV may be structured as an umbrella fund with segregated liability between sub-funds. As a result, many large scale real estate investors use this structure to hold different real estate assets in different sub-funds under the same ICAV. The main advantage of QIAIFs (as set out above, the ICAV is a type of QIAIF) is that the usual restrictions of the Central Bank of Ireland (CBI) relating to asset diversification, borrowing and leverage are disapplied – for example, there are no borrowing or leverage limits for a QIAIF. For this reason, the CBI restricts the availability of QIAIFs to professional and institutional investors only and a minimum subscription (€100,000 or currency equivalent) applies.

As a result of changes introduced in 2016, many investors will be subject to a 20% tax on profit distributions or disposals of units in a QIAIF. As a result of changes introduced in 2019, QIAIFs can be subject to tax on deemed income where their leverage exceeds 50% of the cost of the assets.

7.3 How are these vehicles established and administered in your jurisdiction?

Irish companies: Irish companies must be incorporated with the Irish Companies Registration Office and are subject to the provisions of the Companies Act 2014, including the corporate governance provisions applicable to the type of company.

REITs: A REIT is also subject to the provisions of the Companies Act as it is a type of Irish company. If the shares of a REIT are listed on an EU regulated market, such Euronext Dublin operated by the Irish Stock Exchange, it will also be required to comply with more detailed corporate governance requirements set out in the Companies Act, as well as the rules of the relevant regulated market. The UK Corporate Governance Code also applies to companies listed on either the London Stock Exchange or the Irish Stock Exchange (in the form of the Irish Corporate Governance Annex).

Non-Irish companies – Luxembourg companies: Luxembourg companies are established in Luxembourg and are subject to the legislative requirements of Luxembourg. Luxembourg companies can be separated between regulated and unregulated structures, and different requirements will apply depending on the type of entity.

Irish regulated funds – the ICAV: ICAVs are established and regulated by the CBI, and are subject to the governance requirements of the CBI. The appointment of officers to the board of an ICAV is subject to the prior approval of the CBI, which carries out ‘fitness and probity' checks on each applicant. ICAVs are subject to the Irish Collective Asset-management Vehicles Act 2015 and the board of an ICAV has a fiduciary duty to ensure that this act is complied with. The board of an ICAV must also observe the Irish Funds Industry Association's Corporate Governance Code.

8 Planning and zoning

8.1 How is land use regulated in your jurisdiction?

The Local Government (Planning and Development) Acts 1963 to 1999 and the Planning and Development Acts 2000 to 2019 govern land use and planning and zoning matters in Ireland. This is done by way of different development, sustainability, landscape conservation and special amenity plans. The local planning authority where the property is situated is responsible for enforcement of the Planning Acts, and each local authority will also have a development plan setting out the overall planning and development policy of that local authority. These plans generally include broad aims in relation to housing, infrastructure and green space facilities, among other things.

8.2 What is the process for obtaining planning permission? How long does this take? What costs are incurred?

An applicant must apply to the relevant local planning authority for planning permission, providing all relevant documentation, including maps and drawings where applicable. A public notice of the proposed development must also be made; this can be done by placing a notice in a local newspaper and erecting a site notice at the property. Generally, a planning authority must make a decision in relation to an application for planning permission within eight weeks of receipt of same. If the application for planning permission is refused, this decision may be appealed to An Bord Pleanála (the Planning Appeals Board, which is an independent third-party planning appeals board) within four weeks of the date of the decision. If a decision to grant the application for planning permission is made, third parties may appeal this decision to An Bord Pleanála within four weeks of the date of the decision. If no appeals have been lodged by third parties within this timeframe, a final grant of planning permission will issue from the planning authority. An Bord Pleanála has a statutory objective to determine appeals within 18 weeks of receipt of an appeal. Different fees apply to different types of developments and the fees also vary between the different planning authorities.

8.3 Can a planning decision be appealed?

Yes, please see question 8.2.

8.4 What are the consequences of failure to obtain planning permission or to comply with a planning condition?

Planning permission is required for the development of property or for a material change of use to property, except where the development is exempt under the Planning Acts. Failure to obtain planning permission where required or to comply with a planning condition may lead to enforcement by the planning authority under the Planning Acts. There are three enforcement mechanisms under the Planning Acts:

criminal prosecution;
the enforcement notice procedure or an enforcement action; and
a planning injunction.

Generally speaking, an enforcement action must be taken by the planning authority within seven years of the development. However, an unauthorised development remains unauthorised even where this seven-year rule has been invoked. All the seven-year rule does is prevent a local authority from taking enforcement proceedings – that is, it is statute barred. The development remains unlawful, but immune from enforcement. This can lead to several difficulties, such as obtaining financing or applying for planning permission for any future development at the property.

8.5 Is expropriation of land possible in your jurisdiction?

Yes expropriation of land is possible in Ireland. Local authorities, the National Asset Management Agency (NAMA) (a body established by the Irish government in 2009 to address the Irish banking crisis by acquiring certain loans in exchange for government guaranteed securities) and the Industrial Development Agency (IDA) (Ireland's inward investment promotion agency) all have legislative powers to compulsorily acquire land. Local authorities may compulsorily acquire land:

where the land is derelict or dangerous;
for conservation purposes; or
for the purpose of developing public infrastructure.

NAMA may compulsorily acquire land in order to fulfil its statutory functions. NAMA's powers to acquire land are quite broad; however, it must first make an attempt to acquire the land by agreement and it is only failing such agreement that it may compulsorily acquire the land. The IDA may compulsorily acquire property for the purposes of industrial development and its powers to do this are broad. The Industrial Development Act 1986 (as amended by the Industrial Development (Amendment) Act 2018) provides that the IDA may compulsorily acquire property even where the property is not immediately required, but will, or is likely to be, required for the purpose of industrial development in the future.

Compensation for the compulsory acquisition of land is based on the market value of that land at the time.

8.6 Is confiscation of land possible in your jurisdiction?

Save as set out at question 8.5, land may not be confiscated in Ireland.

9 Environmental

9.1 What main environmental legal provisions apply to the development, use and occupation of real estate?

The Environmental Protection Agency, the Office of Environmental Enforcement and the various local authorities are responsible for environmental regulation.

The main laws which govern environmental matters are as follows:

the Environment (Miscellaneous Provisions) Act 2015;
the Environmental Protection Agency Acts 1992–2011;
the Waste Management Acts 1996–2011;
the European Union (Planning and Development) (Environmental Impact Assessment) Regulations 2018;
the Water Services Acts 2007–2017; and
the Air Pollution Acts 1987 and 2011.

9.2 Who can be held liable for environmental contamination and how are clean-ups effected?

Generally, the entity which caused the environmental contamination will be held liable for such contamination. However, in some circumstances, an owner of property may be held liable due to the principle of strict liability which applies under Irish environmental laws, even where the owner did not cause the contamination. For this reason, where compliance with environmental laws is a concern, a buyer should be advised to appoint an environmental expert to provide a report on the property, as a buyer will want to ensure that it does not inherit any environmental liability. Sellers frequently seek to limit liability for any environmental issues under the contract for sale; and for this reason, either a buyer should insist that any issues are dealt with prior to completion or alternatively an indemnity from the seller should be obtained under the contract for sale. There is also a risk that lenders which enforce security may become secondarily liable for environmental contamination. As a result, lenders may be reluctant to enforce security where environmental issues may exist at a property.

Typically, the entity which caused the contamination will be liable for the clean-up. However, an owner or occupier of the land may also be liable for part of the cost associated with same – or even the entire cost where the entity responsible is not in a financial position to pay for the clean-up. A court may make a clean-up order and any such order should ensure that once the clean-up has been completed, there is no longer a risk of environmental contamination or pollution from that property.

9.3 What environmental provisions and considerations should be factored into real estate transactions?

Where there are concerns in relation to environmental issues at a property, a buyer should engage an environmental expert to carry out environmental due diligence and provide a report in respect of any such issues. Such due diligence is recommended only where there are potential environmental issues and will not be carried out as standard. Environmental insurance may also be an option, depending on the issue identified.

A buyer should also ensure that it is satisfied with any special conditions in the contract for sale dealing with environmental issues and whether any particular issues need to be addressed by the seller prior to completion.

9.4 What initiatives are in place to promote green buildings and energy efficiency in your jurisdiction?

A building energy rating (BER) certificate and advisory report must be provided by all sellers and landlords to buyers and tenants when a building is constructed, sold or rented. A BER certificate rates the building from ‘A1' (being the most energy efficient) to ‘G' (being the least energy efficient). Certain categories of buildings, such as protected structures, are exempt from the requirement to obtain such a certificate.

There is also a requirement under EU law that EU member states, including Ireland, ensure that all new buildings (both commercial and residential) will be nearly zero-energy buildings by 31 December 2020. Directive 2010/31/EU on the energy performance of buildings defines a ‘nearly zero-energy building' as a building with a very high energy performance that has a significant part of its energy requirements met by renewable sources, which are ideally produced onsite or nearby.

Recently, there has also been a move towards ‘green leases' and reference to the Leadership in Energy & Environmental Design (LEED) requirements have become more common in commercial leases in Ireland, particularly of new or refurbished buildings. LEED is an international green building certification programme that recognises best-in-class building strategies and practices in accordance with the guidelines of the US Green Building Council.

9.5 What types of environmental certifications apply in your jurisdiction?

Various types of environmental certifications apply in Ireland to different asset classes.

The ISO 14000 Environmental Management Systems Standard certification has been developed to help entities identify, manage and control activities which have an environmental impact in Ireland.

LEED certification (see question 9.4) is another environmental certification which applies in Ireland. The Green Hospitality Award is a certification aimed at hotels in Ireland.

10 Trends and predictions

10.1 How would you describe the current real estate market and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

COVID-19 has had a negative impact on the Irish real estate market over 2020 and the first part of 2021. Some sectors of the market have been affected more severely than others. For example, occupier activity in the Dublin office market was negatively impacted in 2020; however, this has improved over the first half of 2021. In contrast, the industrial and logistics market has fared quite well, with strong take-up evident in the second half of 2020 and the first six months of 2021.

Activity in the retail property market has also been severely affected, due to government forced closures of non-essential retail outlets over parts of 2021 and early 2021. A large percentage of tenants struggled to meet rental payments in this climate, with the result that many landlords and tenants sought to restructure lease arrangements in an attempt to achieve a collective positon that would allow both parties to survive the economic impact of the pandemic on the ‘non-essential' retail sector. In this regard, the Irish government also developed a voluntary Code of Conduct. The aim of the code is to facilitate discussions between landlords and tenants impacted by COVID-19. The code acknowledges the current landscape, in which firms are experiencing liquidity gaps and debt overhangs. It sets out that parties should act in good faith and in an honest and transparent manner. The code is voluntary, with no statutory basis, and does not change any underlying legal relationship or commercial lease contracts. The code applies until 31 July 2021, but may be extended.

No major legislative reforms are anticipated in the next 12 months. The Landlord and Tenant Law Reform Bill was published in 2011 with the aim of modernising the general law of landlord and tenant in Ireland; however, this has not yet been enacted and it remains to be seen when or whether it will be enacted.

11 Tips and traps

11.1 What are your top tips for the smooth conclusion of a real estate transaction and what potential sticking points would you highlight?

Good communication between all parties is key to the smooth conclusion of a real estate transaction – particularly good communication between the seller and the buyer and their respective professional advisers. Full due diligence on planning and building regulations issues, to include input from planning/fire safety consultants, is also advisable (depending on the nature of the asset), as the buyer will want to ensure that it is not taking on any historic breaches in relation to planning or building regulations. Where real estate financing is being provided, it is also advisable to provide all relevant information to the lender as early as possible and to ensure that all requirements of the lender are dealt with promptly to avoid any delays prior to drawdown and completion. Early and clear agreement on fund flow mechanics is always advisable, particularly where historic security is being released.

Co-Authored by Craig Kenny and Katelin Toomey

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Ireland: Real Estate Comparative Guide