Jonathan O'Brien (Cork North Central, Sinn Fein)
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Question 35: To ask the Minister for Finance if he will provide a list of the funds provided by him for all buildings currently rented or leased by the State that are subject to upward only rent reviews indicating which of those buildings have been subject to rent increases in the past three years; and the amounts of any such increases. [18590/11]

Brian Hayes (Dublin South West, Fine Gael)
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Prior to March 2010, when legislation addressed the issue, virtually all commercial office leases in the market with a lease term longer than five years contained the provision for an upward only rent review. This stipulated that on review, the rent could not be lower than the current passing rent or the initial rent. In general, these lease rent review provisions typically provided for rent to be determined every five years and the rent review provisions usually stipulated that the reviewed rent could not be lower than the rent payable prior to review.

The Office of Public Works has 462 leases, of which 160, with a total rental yearly value of €58,080,640, attract the upward only rent review clause. The following table schedules these leases with county, location, building and rent per annum. Seven leases had a rent increase since 2008 and the total increase was €206, 882. The details are set out in this table.

As can be seen, virtually all this increase related to one property, which is Dockgate in Galway. The OPW resisted the rent increase that was being sought and referred the review to a formal independent arbitration. The arbitrator, whose decision is binding, awarded an increase of 24% in the rent payable to the landlord.

Pearse Doherty (Donegal South West, Sinn Fein)
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I am surprised that Question No. 70 has not been taken with this. The Department has obviously appealed the decision on the upward only rent review, or sought an independent arbitration. Does the Minister of State believe it is fair that other Departments in the Government are operating such rent reviews? The Department of Agriculture, Fisheries and Food operates an upward only rent review at a premises in Killybegs, and this is putting businesses there under severe pressure, and possibly out of business.

In respect of the Government's commitment to legislate to end the practice of upward only rent reviews, what is the Minister of State's view on the DKM report, which has shown that a substantial loss would be borne by the State, via the banks and NAMA? Has there been any contact with NAMA officials about legislating to end this practice?

Brian Hayes (Dublin South West, Fine Gael)
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The Deputy is aware of the commitments in the programme for Government in this area, which are being dealt with by the Minister for Justice and Equality. He is working with the Government on the legislation under consideration and will make a statement in due course.

As the principal body responsible for leasing State property, the issue is about getting value for money. The total sum paid out by the Department in 2009 was €149 million. For 2011, we estimate that the sum will be €117 million, so it is coming down. I must admit I would like to see it come down sooner, as it is important to get better value for money when we are running a deficit reduction programme. The OPW is proactive in ensuring we get rent reviews and in ensuring the breaks which were part of the original negotiations are set out.

Michael McGrath (Cork South Central, Fianna Fail)
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Has the Government got legal advice to the effect that it is possible to remove this clause from existing leases? Has any assessment been done of the overall net impact to the State of removing the clause? While it would be very beneficial for tenants and retailers, there is also an impact on property values, financial institutions and NAMA.

Brian Hayes (Dublin South West, Fine Gael)
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That is primarily an issue for the Minister for Justice and Equality, as he is responsible for the legislation. He is having consultations across the Government on the issue. The key issue is the long-term impact it will have on the State. We all want to reduce leases and the amount we are spending on them. There are many cases where one arm of the State is renting from another arm of the State. This is principally an issue for the Minister for Justice and Equality to determine, following Government support and approval. I presume he will be in a position in the not too distant future to make a statement on that.