Charles Flanagan (Laois-Offaly, Fine Gael)

I will accept the Ceann Comhairle's word. The Minister appears to have grasped the import of what I was suggesting in my amendment and I hope he will confirm that in his reply. Agreements for leases are, in effect, leases and it may be unduly harsh on those who have already concluded agreements but not yet leases. I would welcome confirmation of that point from the Minister and would be reasonably happy if it was indeed the case.

I wish to refer to the points raised by Deputy Tuffy regarding difficulties for drafters of leases in multi-unit developments, of which there are many. The provision for rent review is almost always made by reference to the consumer price index or a fixed increase. I ask the Minister what device he intends to use in dealing with such leases.

I am concerned that it may not be possible for parties to contract out of this section. Even if both parties to an agreement desire an alternative arrangement to suit their business needs, they cannot now give legal effect to it. I have some sympathy with the points raised by Deputy Ciarán Lynch in this regard but I am not sure if that is sufficient in circumstances where parties have entered into agreements for leases with the benefit of expert advice. I do not know of anybody who would engage in the drafting or conclusion of an agreement for lease, particularly one involving high street retail outlets, without the benefit of legal, accounting and tax advice. If these agreements may be set aside under law, the advice received and the commitments entered into would be left in a precarious position.

The Minister may have received correspondence from the Irish Association of Investment Managers regarding unintended consequences for landlords, tenants and the property market in general. As he will be aware, investment managers invest in property on behalf of pension funds. Has he taken advice on the consequences of the change on the valuation of investment properties? The valuation of property assets is dependent on the multiplier assigned to a particular income stream and a lower multiplier is used in the event of uncertainty. It may have the effect of further increasing pension fund deficits. As my colleague, Deputy Barrett, noted earlier, this is important in the context of NAMA because that agency's ultimate cost to the taxpayer will depend on its ability to generate a profit through the eventual sale of its assets. I am mindful of Deputy Barrett's advice because the ultimate sale of the asset may well realise an amount which is significantly smaller than envisaged. It is unknown territory as to what might happen in terms of valuation. I seek the Minister's reassurance that this new proposal will not have the effect of reducing the value of properties even further and will not have an unintended increase for the taxpayer, which may well be a consequence of NAMA. In addition to the reduction in the value of assets, it may be more difficult for NAMA to find purchasers for the properties. That point was also referred to by Deputy Barrett. There are large unfinished estates, apartment blocks and commercial developments in every constituency in the country, including my own, which will become health and safety hazards. I can foresee a situation where, under health and safety regulations, NAMA will have to engage demolition contractors to remove such developments. It could well be, therefore, that upwards-only rent reviews will reduce the risk of defaulters on bank loans by property investors as there is no risk that the income stream may fall at rent review and be insufficient to meet mortgage repayments.

With no certainty on the future minimum income stream, banks will be less likely to purchase the NAMA assets. An unintended consequence of the Minister's proposal may be the discouragement of foreign investment in the Irish property market as income streams will be less secure than in the United Kingdom, for example. I trust the Minister has taken these issues into consideration. Going back to the initial point raised by Deputy Ciarán Lynch, it may have been wiser to have a stand-alone piece of legislation, rather than attaching this at the 11th hour to a Bill that has been knocking around for many years. It was a surprise to see the new-found speed with which the Minister wishes to have this legislation enacted. I am conscious of the Minister's earlier point about mortgages and repossessions. However, if there was a doubt, and there may well be a doubt, as to the unintended consequences of the Minister's action, it could have been better to leave the matter to a stand-alone Bill of a type produced by the Labour Party, although I cannot say that Bill was perfect. No doubt Deputy Ciarán Lynch would not say it is perfect either, but if it were examined by the Minister's experts and those of the Attorney General, they may well come up with a Bill to meet people's concerns.

Professionally advised tenants may feel they wish to set aside the lease but may not have an opportunity to do so under the Minister's unduly restrictive measure. With regard to the retrospection sought by Deputy Ciarán Lynch, the Minister should give the House the benefit of his best advice in that regard. I accept that there is an obligation on a tenant to pay the rent as agreed. The implied obligation of a tenant to pay rent goes back to section 42 of Deasy's Act of 1860. That obligation will always be expressly stated in the lease in any event.

I refer the Minister to the case of Charlton v . Kidney and McNamee involving a special summons application for the appointment of a rent review arbitrator. In that case the Master of the High Court expressed the view that upwards-only rent reviews might be invalid in the current financial climate. In the High Court, Judge Laffoy took a completely different view when the final hearing of the case took place. She expressed the view that a tenant who has signed up to an upwards-only rent review clause was bound by it. That can only be changed by legislation, which is what the Minister is doing, but it will only refer to leases or agreements that will be entered into following the passing of the legislation.

To go back to my earlier point, I do not have to withdraw my amendments at this stage. I look forward to receiving the Ceann Comhairle's letter, which I hope will meet the concerns I have raised.

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