Written answers

Wednesday, 19 September 2012

Department of Justice and Equality

Commercial Rent Reviews

Photo of Michael Healy-RaeMichael Healy-Rae (Kerry South, Independent)
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To ask the Minister for Justice and Equality his views on a matter (details supplied) regarding upward only rent reviews; and if he will make a statement on the matter. [39442/12]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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To ask the Minister for Justice and Equality having seen the evidence and effect of upward only rental difficulties in the commercial rental sector throughout the country for the past number of years, if he will consider setting up a body to which such disputes could be referred, structured along the lines of the Small Claims Court or the Labour Court with a view to allowing access for both the landlord and the tenant to seek an accessible and inexpensive resolution by way of arbitration in view of the on-going difficulties that continue to present in this connection; and if he will make a statement on the matter. [39588/12]

Photo of Alan ShatterAlan Shatter (Dublin South, Fine Gael)
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I propose to take Questions Nos. 160 and 171 together.

Section 132 of the Land and Conveyancing Law Reform Act 2009 prohibits upward only rent reviews in respect of leases entered into on or after 28 February 2010. Following extensive consideration of this matter, the Government announced in December last that it had decided not to proceed with legislation to abolish upward only rent reviews in existing commercial leases, i.e., those entered into prior to 28 February 2010. There was a substantial concern that any legislative scheme involving interference in the contractual relationships of private parties would find it extremely difficult to survive a Constitutional challenge. In addition, the Government was advised that any model proposed would require the payment of compensation to landlords whose rights were infringed in order to ensure that the proposal would be compatible with the Constitution and with the European Convention on Human Rights. The Government was strongly of the view that payment of compensation to landlords in such circumstances could not be justified in the current economic climate.

While legislative intervention may not be feasible, the Minister for Finance has outlined the role which NAMA can play in dealing with the problems caused by upward only rent reviews which apply to NAMA properties. NAMA has published its policy guidance which will inform the approach to be taken where relevant tenants are experiencing difficulties in paying rents. Where there is a failure to reach agreement on revised contracts the policy guidance provides an opportunity for NAMA to approve rent reductions where it can be shown that rents are in excess of market levels, and that the viability of the tenant is threatened. The policy also provides for the appointment of an independent valuer to ascertain current market rent. Where a tenant is not getting satisfaction he or she can contact NAMA directly.

There are no plans to establish an Arbitration Tribunal to deal exclusively with rent review disputes. However, there is a rent review arbitration code in being which was drawn up by a group of experts whose membership was drawn from all stakeholders in the commercial property arena. The code provides a mechanism to deal with the resolution of rent review disputes in the commercial property sector. A particular feature of the code is that it contains detailed provisions dealing with the production of comparative evidence in relation to property transactions. It also places a firm duty on all parties to disclose all relevant information which is in their possession. As matters stand, parties are free to specify that this code should apply in relation to rent review arbitrations and I would encourage all parties to make use of its provisions.

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