A NUMBER of landlords were last night close to agreement with Ely Property in a legal row over a student apartment block near Dublin City University.
The matter was due before the High Court yesterday as Ely sought the extension of an injunction preventing the landlords repossessing the properties involved.
Discussions between the two parties superseded the legal process, however, and by last night a resolution was almost in place. It is believed the settlement will allow landlords, if they wish, to exit the 10-year management leases they had in place with Ely by each paying a charge of thousands of euro to the company. They will continue to own the properties, located in the Gateway development in Ballymun.
The core of the legal dispute lay in charges which Ely imposed on the landlords after the firm was bought out of Newcourt Group last year by entrepreneur Philip Marley. Having founded the company, Mr Marley paid €39 million to take ownership of it again. Newcourt went into receivership last month.
Ely said the “central charges”, which amounted to €1,500 per year for each apartment, had not been passed on to landlords by Newcourt through an error. As a result, the charges were in some cases imposed retrospectively for three years, with about 200 landlords affected across Ely’s portfolio of properties in the UK and the Republic.
Some landlords in Ballymun, meanwhile, claimed to have received less rent than they expected from the scheme. About 40 landlords were involved in the legal case.
Under the agreement being negotiated, the landlords are expected to accept the validity of the central charges while simultaneously exiting their management leases with Ely. The payment of fees for breaking the lease will produce a financial boon for Ely which, when combined with the retrospective central charges, will help Mr Marley and his private-equity backers to defray some of the costs of the buyout.
The Gateway was marketed in 2006 as a tax-efficient property investment. The price of the three-bed units at that stage ranged from €305,000 to €330,000, with the properties to be leased for 10 years via a management scheme. It was a Section 50 development, with the tax benefits linked to tackling a perceived shortage in quality residential accommodation for students. Investors were told to expect a 4 per cent yield over 10 years.
