Dermot Ahern (Louth, Fianna Fail)

The Bill is deeply flawed. I will state what the Government has already done to address some of the difficult circumstances confronting those in the retail sector. We must not lose sight of the fact that the rent issue, while undeniably important, is not the only issue with which that sector has to deal and the Government has been very proactive, across the broad range of economic activity, in seeking to support the retail sector. A revived economy is the best support that Government can offer and Ministers across a range of Departments, are working tirelessly to create a business-focused environment which is essential to the overall well-being of our commercial sector.

We must not lose sight of the fact that the rent issue, while undeniably important, is not the only issue with which that sector has to deal and the Government has been very proactive across the broad range of economic activity in seeking to support the retail sector. Ultimately, a revived economy is the best support that the Government can offer and Ministers, across a range of Departments, are working tirelessly to create a business focused environment which is essential to the overall well-being of our commercial sector.

For business leases entered into from 28 February, the inclusion of upward only rent review clauses is effectively prohibited. The relevant provision is contained in section 132 of the Land and Conveyancing Law Reform Act 2009. The effect of that provision is that such rent review clauses are to be construed as providing that the rent payable following review may be fixed at an amount which is less than, greater than or the same as the amount of rent payable immediately prior to the date on which the rent falls to be reviewed. This provision applies even if the lease contains what purports to be an upward only rent review clause.

In introducing section 132, I was conscious of the fact that the concept of an upward only rent review clause did not cohere well with current economic reality. I was concerned to ensure, within the legal and constitutional constraints which inevitably inform the policy choices which Government must make, that some measure of relief was granted in respect of business tenancies. I was clear when steering that legislation through the Houses about the limitations we have in that respect but wanted some measure of relief to be granted in respect of business tenancies. I wanted to send as strong a signal as possible to the market to encourage landlords and tenants to re-negotiate rents to take into account the current economic difficulties. Many landlords are renegotiating on the principle that half a loaf is better than none. The Deputy does not have a monopoly on compassion in this area but compassion cannot change the legal reality within which we operate.

I am as aware as anyone else of the hardships being borne at this time by the retail sector. However, every redundancy and every business failure cannot be laid at the door of upward only rent review clauses. Other factors are also at play and the Deputy does not do the sector any service by suggesting that the resolution of this one problem will deal with all of the difficulties which confront it.

In the future, the section 132 provision may bring about shorter leases of seven to ten years, possibly accompanied by a fixed rent for the duration. In the retail sector the way will be open for turnover based rents, arguably a fairer way of determining matters in this sector. In general, the flexibility introduced by the provision should facilitate tenants in trading their way out of present difficulties.

I have already established a working group to look at the process whereby rents are reviewed in the commercial sector. Its terms of reference are to consider the operation of the current system for determining the rent payable on foot of a rent review clause, with particular emphasis on the arbitration process and the adequacy of the information available to all parties and if necessary to make such recommendations for change as may seem appropriate. I have also asked the group to report by the end of June. Michael Durack SC has agreed to chair the group and it is proposed that a number of representative groups, such as Retail Excellence Ireland, IBEC, the Small Firms Association, ISME, the Irish Association of Investment Managers, the Irish Auctioneers and Valuers Institute, the Irish Association of Pension Funds, the Society of Chartered Surveyors, the Department of Justice, Equality and Law Reform, the Department of Enterprise, Trade and Employment and the Office of the Attorney General will have a representative on the group.

The Government is more than willing to adopt any proposal the working group will make and to listen to any of the relevant suggestions from the Opposition of the groups representing the retail sector. We cannot, however, accept half-baked proposals. They must be legally sound. With due respect to the Deputy and the proposal before the House tonight, and I do not want to be confrontational-----

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