Mary Lou McDonald (Dublin Central, Sinn Fein)
Link to this: Individually | In context | Oireachtas source

To ask the Minister for Jobs, Enterprise and Innovation in view of the damage done to the economy and small business in particular by the continued operation of upward only rent clauses, if he will direct agencies under his Department to remove such clauses from within leases to which the agency is the lessor. [9053/13]

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context | Oireachtas source

IDA Ireland, Shannon Development and Forfás are the only agencies under the aegis of my Department that have upward only rent clauses in place.

I am informed by IDA Ireland that, as of February 2013, IDA Ireland currently has 50 occupied property leases across its IDA and Private Finance Building Portfolio. 37 of the leases were granted prior to 28 February 2010, at which time all IDA Ireland Building Leases would have contained upward only rent reviews which was the norm. There have been no recent rental increases on the 37 leases granted prior to 28 February 2010. However, where a business is in difficulty, the IDA will on a case by case basis respond and facilitate requests from companies.

From 28 February 2010, IDA Ireland’s leases are linked to market rent and there are currently 13 leases that were granted after 28 February 2010. These leases do not contain upward only rent review clauses.

Shannon Development have informed me that it has 42 leases which contain upward only rent clauses. Consideration of reductions in rent are dealt with on a case by case basis, regardless of whether or not the lease includes an upwards only rent review clause. The number of long term leases executed by Shannon Development since 28 February 2010 is six, and there are no upward only rent review clauses subsequent to this date.

However, in view of the planned merger of Shannon Development with Shannon Airport into a new company at the airport, it is not considered appropriate to make any changes to the lease terms at this time.

I am informed that Forfás is the head lessee on the leases for three properties. The head leases do not allow for rent reductions at review (rent can only be equal or greater than that paid in proceeding period). The result of the rent reviews on these properties is ultimately passed on to all Forfás tenants. If Forfás did not pass on rent increases following review then it would have to pick up the shortfall which would have to be funded by the Exchequer.

The latest rent reviews for two of these properties took place in 2009 which were settled with Nil increases agreed. The rent review on the third was due in 2011, the landlord did not instigate a review, but Forfás had indicated that it would not accept an increase.