Dermot Ahern (Louth, Fianna Fail)

The complexity of the financial arrangements which sometimes underpin commercial lease arrangements is completely ignored, as are the obligations which are taken on foot of them. Furthermore, in purporting to treat all tenants equally by giving them the benefit of the Bill's provisions, there is a risk that some will be given a benefit which they do not need and that some landlords may suffer disproportionate disadvantage.

I understand that this Bill has not been developed with the interests of landlords in mind. However, I cannot ignore the fact that, while originally entered into by both parties, the upward-only rent review clause was intended to protect a landlord's income stream from the vagaries of the market. If that benefit is now to be removed by the State and not the market, we would be depriving individuals and companies of an important contractual right, and would be doing so without compensation and also in an arbitrary and discriminatory way.

The provision in the Bill enabling the order to limit its application to a class or type of business, or to a particular geographical area, or how that is to be defined, does not solve this problem. Not only are there no guidelines as to the basis upon which any order could be lawfully made, which in itself creates constitutional issues, but in making provision for such order, the Bill implicitly recognises it is not legally possible to apply section 132 of the Land and Conveyancing Law Reform Act 2009, which was passed last July, to all pre-existing leases indiscriminately. In other words, if the promoters of the Bill are so certain about its legality, why does the Bill not just state bluntly in the Bill that the ban on upward-only rent review applies to existing leases? This is not stated and the Bill does not address the fundamental issue of how the State can constitutionally legislate to extend section 132 to pre-existing leases.

The Deputy is undoubtedly aware of the principles which informed the striking down by our courts of the old rent restriction legislation. Those principles inevitably come into play in regard to the proposed interference with commercial rights freely negotiated between individual parties.

Reference has been made to the ground rents legislation in the context of the Shirley High Court decision - which it is acknowledged will be heard by the Supreme Court very shortly - as if that amounts to a precedent for intervening in this particular area. Again, the advice from the Attorney General is that the Shirley decision deals with a completely different matter, namely, the entitlement to purchase the fee simple, subject to payment of compensation. That provision is part of a long-standing legislative scheme designed to remedy the obvious inequity of the old common law position whereby on the expiration of a lease the property built by the tenant would revert to the landlord. This is patently unfair. The Attorney General has advised that the justifications for such a provision do not apply to a proposal to extend section 132 to existing leases.

The retrospection element contained in the Bill and the potential effects this would have upon completed legal transactions immediately raise issues of compatibility with the Constitution. While the Deputy may have advice to the contrary, my legal advice and that of the Government, is that legislative restrictions which affect property rights retrospectively are prima facie unjust.

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