Aideen Hayden (Labour) | Oireachtas source

Senator Darragh O'Brien is correct in that it is Labour Party policy to abolish upward only rent reviews. However, this is a complex issue and must be handled correctly. Much and all as I applaud the Bill and its sentiments and regardless of the rhetoric that has been exchanged in the Chamber, aspects of this situation must be considered.

I thank Senator Quinn for presenting this Bill. It is an opportunity to raise this important issue yet again in the public domain. The presentation of legislation such as this represents the finest aspects of the Seanad in tabling legislation on difficult commercial and social issues. In many speeches to the House, Senator Quinn has made persuasive arguments about the damage that has been done to small businesses in particular by upward only rent reviews. All Senators are aware of that damage. One need only walk down the main street of any small or middle-sized town, Dún Laoghaire or this city to see the impact on the commercial sector, including the loss of venerable, well-established businesses and the consequent proliferation of what we used to call pound shops but are now termed €2 shops. No one would disagree that there is a serious issue that must be tackled.

My speech will have two parts. It is important to give balance to the debate. I have practised as a commercial lawyer. Upward only rent review clauses in commercial property leases are the result not just of the Celtic tiger era, but of the radically different development of the legal systems relating to commercial and residential properties. Prior to the collapse of the economy, long leases that provided certainty were the norm and were held up as promoting stability in the commercial leasehold market. In my experience of sitting on the Commission on the Private Rented Sector in 2000, five year rent reviews were held up as the ideal for which the residential sector should aim. In the 1970s to the 1990s, the argument was that tenants benefited significantly from the certainty provided by five year leases in times of rising rents. This is how upward only rent reviews came into being. It is important we understand this. For a time, tenants who had the benefit of commercial leases gained substantially from periods of rent certainty.

Like all Senators, I accept that we are in a different era and that upward only rent review clauses are damaging to business. According to the Bill's explanatory memorandum, Senator Quinn does not foresee any constitutional issue. I am afraid that I must disagree. The main difficulty with the proposal is that it is an arbitrary and disproportionate blanket provision. While all Senators would like small businesses that are in trouble to benefit, that would not be the impact of this proposal. According to the advice the Government has received, a class of landlords would take the consequences of a provision that is in effect retrospective on contracts that were freely negotiated - admittedly, not all of them were free - between equal parties with equal negotiating contractual positions.