Seán Barrett (Dún Laoghaire, Fine Gael)

It is obvious from the detailed presentation made by Deputy Charles Flanagan on behalf of Fine Gael that this party has dealt comprehensively with the various requests put to us on this issue. While everybody has sympathy for retailers at a time when the economy is in the current state, it would be irresponsible of us to try to achieve something which ultimately could cause more problems, rather than solving the mess we are trying to sort out. One must accept that the Minister is acting in good faith and that an attempt is being made to deal with a difficult situation on behalf of retailers. As Deputy Charles Flanagan said, however, it would appear that if an attempt was made to interfere with existing leases we would probably end up with somebody challenging this legislation. It will end up in the Supreme Court and God only knows when a decision will be taken. In the meantime, new leases will be entered into and no change will have been made. Having accepted in good faith that the Minister is attempting to deal with the problem and can only go so far, I accept what he says - that on the advice he has received, we can only deal with the future and not with existing lease agreements.

Given the contributions made by Deputies Ciaran Lynch, Joanna Tuffy and Charles Flanagan, this matter should be re-examined to see if we are correct in saying that it would be impossible to deal with existing leases. What happens when there is a break clause in the existing lease? Can an agreement be reached at that stage if it is agreed by both parties that a rent be reduced? At the end of the day, one may have a piece of paper that says this or that is what will happen on rent, but if two people agree to something I cannot see that an agreement cannot be reached. If a tenant says "I cannot afford to pay the rent" and the owner says "OK, I'll agree to a 10% reduction" the world will go on. There are going to be an awful lot of vacant units one way or the other.

One must go into detail in examining this type of legislation because the value of property is often based on the actual or anticipated rental income. I repeat that the whole area of NAMA has tremendous consequences down the road. The Minister attended the Committee on Finance and the Public Service to discuss the NAMA proposals. We also had Mr. Bacon and the gentleman from the NTMA, who will be in charge. The Minister did make a very peculiar point at that committee meeting. When asked if NAMA purchases a piece of property at a certain price and subsequently discovers that it paid too much and later sells it on at a loss, the Minister seemed to be of the opinion that he can go back to the bank in question and seek the difference between the purchase price and the sale price. I doubt that very much, but it goes to show that when we get into the territory of buying and selling property, much depends on the circumstances of the economy at any particular time. The market will dictate the price.

What about a neighbourhood shopping centre where individual units are owned by different landlords? If I am in a unit that is exactly the same size as the unit next door occupied by my colleague, and his lease is renewed and he is paying a lower rent than me, that is a set of circumstances that will be extremely difficult in the future. This is just not a simple issue of making a change in the law and hoping for the best. This has long-term consequences for the future value of property. We are inclined to think of the single shop, but if this applies, it will apply to all leases of all properties, be it a major office development, a major shopping complex or even an individual shop. There is a tremendous difference in value between large developments and shops on the street corner.

Given the Minister's advice, if we were to push this it could end up being challenged in the Supreme Court. Given the strong submissions made by the Labour Party and the Fine Gael Party on this matter, and the difficult circumstances in which retailers find themselves at the moment, the Minister should take a look at the whole issue. Perhaps he could discuss with the Minister for Finance, in the context of the NAMA legislation, the changes these arrangements will have on the value of properties that come under the ownership of the State. I would warn against taking the NAMA legislation too lightly. It has huge consequences for the taxpayer. I would like to know what will happen as a result of any change in this area in terms of the long-term value of properties and the liabilities that will rest on the shoulders of the Irish taxpayer.

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