Tony Killeen (Clare, Fianna Fail)

In effect, what this amendment is proposing is that a change to the law affecting business tenancies be made retrospective. The proposed change to the Landlord and Tenant (Amendment) Act 1980 contained in the Bill is to enable parties to a business tenancy to contract out of the provisions of Part II of the 1980 Act which gives the right to a new tenancy in certain circumstances. The important precondition for contracting out is that the tenant or would-be tenant has first received independent legal advice.

The provision draws upon section 4 of the Landlord and Tenant (Amendment) Act 1994 which enabled business tenants who had, or were entering into, leases of office premises to exercise this opt-out. Unlike the provision in the 1994 Act, the ability to contract out is not confined to cases where the renunciation has been completed prior to the commencement of the tenancy. This is a deliberate policy choice since it is intended to facilitate existing business tenants who, in the absence of an ability to renounce their statutory right to a 20-year tenancy, might face eviction as the period of five years, after which the right accrues, draws to a close. One of the effects of the provision in Part II of the 1980 Act that gives the business tenant a right to a further 20-year tenancy after a continuous tenancy of five years is that landlords tend to offer business leases, especially in the small business sector, for a period of four years and nine months. This is, in general, because landlords are unwilling to put themselves in a position where they have committed their property to a long leasehold during which they may find themselves at a disadvantage if, say, they are unable to secure rent reviews that keep pace with inflation or they may have to pass up on development opportunities that might arise during that period.

As this Bill proceeds through the Oireachtas, there are many business tenants who entered into their tenancies three, four or more years ago and whose leases are approaching their end. When they entered into those tenancies, there was no inkling that there would be a change in the law along the lines now proposed in this Bill. They were content to take the leases on the terms being offered by their landlords and had no expectation of anything other than that at the end of their leases, they would have to look around for alternative premises either to lease or to buy. As this Bill has made its way through the Houses, there are some whose leases have expired exactly on that basis.

They now see the possibility offered in the Bill, a possibility that will be available to others who entered into leases a little later than they did, and they have made representations to Members in both Houses to see whether it is possible for them to avail themselves of the new law. Naturally, that happens all the time in respect of all the issues raised. It is a very important point and as was the case on Committee Stage when the Senators set a particular date retrospectively, the Minister, among other things, pointed out that there were difficulties relating to the specific date. To be fair to the Senators who tabled the amendment, the only alternative was to leave it open-ended in retrospective terms. This also creates a particular difficulty. In respect of Senator Regan's point, the proposal as it stands is not retrospective but it does enable current tenants to avail of the opt-out. Naturally, they will not have that facility until after the Bill is enacted and commenced. Without reading through a lot of material with which both Senators are considerably more familiar than I am, my understanding is that this is the current situation in respect of the provisions in this Bill. There are two reasons, one of which is dealt with or circumvented by the Senator by removing the date but the other, which is the retrospective element, continues to be a difficulty that the Minister believes cannot be addressed in this legislation