Finian McGrath (Dublin North Central, Independent)
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Question 61: To ask the Minister for Justice and Equality if he will respond to correspondence regarding upward only rent clauses (details supplied). [39098/11]

Alan Shatter (Dublin South, Fine Gael)
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In my replies to Parliamentary Questions over the course of the last month or so I indicated that I would shortly be in a position to provide some additional clarity as to my intentions in relation to the upward only rent review issue which is the subject of the letter to which the Deputy refers. The Deputy will be aware from yesterday's Budget speech that the Government has decided, with considerable regret, that it is not possible to proceed with this legislation.

The proposals which I brought to Government earlier this year had the aim of providing relief for tenants whose businesses might otherwise be viable were it not for the fact that they were paying rents significantly above prevailing market levels. However, it was clear from consultations with the Attorney General that this particular approach gave rise to significant constitutional difficulties. It was also clear that any legislative scheme involving interference in the contractual relationship of private parties would face severe challenge. To enhance the ability of any legislation in this area to survive a Constitutional challenge, the Government would be liable for the payment of compensation to landlords, without any regard to the financial circumstances of those landlords, and without any guarantee that payment of such compensation would render the legislation in question proof against a challenge. In that context and given the current economic circumstances, the Government was strongly of the view that payment of compensation was not defensible.

In an attempt to alleviate some of the pressure on those tenants whose landlords are in the NAMA process, my colleague the Minister for Finance spoke yesterday of the role that NAMA can play in dealing with the problems caused by upward only rent reviews which apply to NAMA properties.

I welcome NAMA's pragmatic approach to this matter and I would hope that those landlords who have yet to engage with their tenants will emulate it.