Dáil Éireann debate -
Friday, 3 Feb 1989

Vol. 386 No. 6

Landlord and Tenant (Amendment) Bill, 1988: Second Stage.

Minister for Justice (Mr. Collins)

I move: "That the Bill be now read a Second Time."

The purpose of this short Bill is to amend section 13 of the Landlord and Tenant (Amendment) Act, 1980, so as to restrict its application in relation to certain tenements in the Custom House docks area. The amendment will enable leases to be made with financial services companies in the docks area without a statutory right to renewal of the tenancy accruing. It will be for the parties concerned to negotiate and agree on the length of the lease and the terms for its renewal. The Bill follows on from submissions made by the Custom House Docks Development Authority which is the statutory authority charged with developing the Custom House docks area. There have also been consultations with the International Financial Services Centre Committee in the matter.

The provisions of the Bill are mainly technical and, in the overall context of the landlord and tenant code, will have a very limited application. The Bill is aimed only at financial services companies locating in the Custom House docks area. It is not aimed at other kinds of tenants, for example, shopkeepers, restaurateurs etc. who will also be located in the docks area.

Before dealing with the provisions in the Bill it would help, I think, if I were to give the background to the provisions in the 1980 Act which the Bill will change. The 1980 Act, which consolidates, with amendments, earlier 1931 legislation, governs the rights of tenants of "tenements"— a technical word that is defined in section 5 of the Act. In general it means the subject matter of a lease or tenancy of any nature. The tenant has a right to compensation for improvements and to new tenancies, or compensation for disturbance. The tenant is also entitled to compensation from his landlord, on quitting the tenement on expiration of his tenancy, for every improvement made by him or his predecessor in title which adds to the letting value and is suitable to the character of the tenancy.

The right to a new tenancy is given under the 1980 Act to certain tenants of tenements on satisfaction of certain conditions. So far as business tenants are concerned, under section 13 (1) (a) of the Act the right to a new tenancy is given to all tenants of three years' standing. Apart from that, tenants in general may base their claim under section 13 (1) (b) where there is 20 years' continuous occupation or, under section 13 (1) (c) where the value of improvements made by the tenant are more than half the letting value of the tenement.

Prior to 1931 if a business tenant was disturbed in possession without good and sufficient reason he was entitled to monetary compensation for the loss of goodwill he sustained. The 1931 Landlord and Tenant Act introduced a new principle. The business tenant was to be entitled not to monetary compensation but to a new tenancy for 35 years where he was in possession for three years. The period of three years was chosen because it was felt that it would take that length of time on average to build up the goodwill of a business. A tenant was not, however, automatically entitled to a new tenancy. One could only be refused by the court for reasons set out in the 1931 Act, and now set out in the 1980 Act. If a new tenancy is not granted for one of the specified reasons the tenant is entitled to compensation for the disturbance which would include pecuniary loss arising from loss of goodwill. It is not possible to contract out of these statutory provisions.

The practical effect of the existing law, if applied to the case of international financial services companies in the docks area, would be to permit only two kinds of leases to be offered, viz. a lease for a term under three years, which under existing law would not give a right to renewal, or a long-term lease with a right to renewal. For purely commercial reasons medium-term leases are not a feature of existing commercial leasing arrangements here. The experience in other countries, however, is that international financial services companies are more concerned in having medium-term leases of, say, ten to 15 years duration.

It has been represented to me that the application of the existing law in this area to international financial service companies would adversely affect the promotion of the Financial Services Centre. It is necessary, therefore, that we make special provision so that leases can be negotiated with these companies outside of the existing legal framework. This Bill seeks, therefore, in so far as relates to the leasing of accommodation in the Financial Services Centre, to create for the financial services companies the same legal environment which they are used to in other countries where they operate, notably the US and many continental countries.

Section 1 of the Bill provides, by way of the addition of subsections to section 13 of the 1980 Act, that the rights to new tenancies in section 13 (1) (a) and (b) will not apply in cases where leases are made with the international financial services companies in the docks area. Those companies are defined in the Bill as companies carrying on a relevant trading operation, within the meaning of section 39B of the Finance Act, 1980, in the Custom House Docks Area. The effect of the provision in section 1 of the Bill will be to remove a certain amount of statutory control over landlord and tenant relations in the cases affected and allow for more flexibility in the leasing arrangements with the financial services companies in question.

I should like to point out that the amendment in the Bill to the 1980 Act will have a life of five years, that is to say, it will have effect only in relation to leases made during the period of five years after the passing of the Bill unless that period is varied or extended by regulation made by me as Minister for Justice, which variation or extension must be approved by both Houses of the Oireachtas before it would come into effect. This will enable the Oireachtas to take stock of the situation after a relatively short period.

From time to time I have had submissions from various sources seeking a general change in the law in this area, that is to increase from three years the period for which a business letting may be made without creating a right to a new tenancy. The considerations which give rise to those submissions are not the same as those which apply to the docks area amendment. They would represent a fundamental change in our law for all business tenants and because of the complexity of the issues and the need to take account of a very wide range of interests, that matter needs to be examined further. Any decisions made will be announced in due course.

A feature of our land law is its essentially historical and evolving nature. In more recent times the Landlord and Tenant Acts of 1978, 1980 and 1984 have brought about some modernisation and, in considerable measure, the consolidation of the post-1922 landlord and tenant code. The change being brought about by this Bill is a very small one, given that it will apply only to certain tenements in the docks area. Nevertheless the change is of importance in that it will meet particular needs in the docks area.

I commend the Bill to the House.

Mr. S. Barrett

This is basically a technical Bill to provide for a change in our law to satisfy the needs and requirements of the financial services centre at the Custom House Docks site. I cannot see why the Bill should be confined to a period of five years, when it will have to be renewed. We are out of line in terms of meeting the needs of industry because some of our legislation is archaic. The reason we are making this amendment to the 1980 Act is that the Japanese, the Europeans and the Americans do not do business on the same lines as we do and if we want to attract them we must change our laws.

We are dealing here with premises used for commercial purposes, not residential accommodation. If people want to derogate from the 1980 Act they should be able to do so. It is their business if they want to have a lease for, say, 20 years rather than be bound by the provisions of that Act. If they are not concerned about protection they should be allowed to opt out of the 1980 provisions, whether in relation to the Custom House Docks site or anywhere else. The IDA have found difficulty from time to time in letting some industrial units because of the provisions of the 1980 Act. Business people from the United States, Japan and Europe do not understand our laws in this area. There is no need for these protections in relation to commercial premises if people agree on a lease for a certain period.

I would ask the Minister to reconsider the need to renew this legislation after five years. This would involve more bureaucracy and added work for officials in the Department of Justice and in this House. It would be a waste of time for the Minister.

The Government have missed an opportunity to bring in further amendments, not simply relating to the Custom House Docks site. Other people are seeking changes in the law. This Bill is another example of the stop-go approach of this Government. They find a solution to today's problems without thinking about the long term consequences. This Bill is a typical example. The same point applies in relation to the Minister for Finance. He delivered what sounded like a good budget but one realises that it has no depth. We are not going anywhere. The Government are failing to consider the changes which will be required in the next century. We cannot have laws which turn away investment while we have 250,000 unemployed.

Ireland is ideally suited for financial services. We have a good environment, which could be improved. We have a young, well-educated population who are very bright and well suited to the financial services sector. Unfortunately, 73,000 of them left the country last year. I hope they will come back because our only resource is our people. We should spell out clearly that when we talk about the protection of the environment we do so for a reason. If we are to advance we must target areas where there are employment opportunities in future.

One of those areas is the financial services sector and we should attract European, Japanese and American businessmen to locate their business here and to live here. We have a modern telecommunications system thanks to the foresight of the 1973-77 Coalition Government who very wisely invested massively and borrowed heavily to impove telecommunications although they knew they would not get the credit for it because it was a long term plan. We are now reaping the reward and there is a lesson there for this Government. They should follow the example of the previous Government. As a result of their planning we can compete with the best in the world in relation to telecommunications.

The Government must also ensure that we do not have the same level of emigration this year as in other years. There is a consensus in this House I call it commonsense which means that the Opposition do not oppose just for the sake of it. The Government must not let this opportunity slip because it is the first time in the history of the State that people put their heads together and tried to do their best for the country.

The budget did not go very far in this direction as the Minister for Finance was not brave enough or did not have the vision to seize the opportunity and to use the goodwill in the Chamber. I wish that we had had a constructive approach from Fianna Fáil when we were in Government. If that had been the case the country would be well on the road to recovery and not as many people would have emigrated.

The Minister referred to the International Financial Services Centre Committee. Why was this committee set up? The Taoiseach seems to have his hand in everything through committees. There is an Arts Council and the Taoiseach's Committee on Arts. In his old style leadership the Taoiseach used to challenge the Ministers — he was seen to be Minister for everthing. However, he now seems to have substituted committees which are getting in the way of what should take place. The Custom House Docks Development Authority were appointed by my colleagues, Deputy Boland and Deputy O'Brien, to whom I am sure the Minister will give great credit for that and putting through the Urban Renewal Act in 1986.

The IDA should also be promoting this centre. Why do we need an international committee? I have a feeling they will be tripping one another up. We should be backing the IDA and giving them clear directions regarding the promotion of this centre. We do not need another committee. The Minister in his reply may give us some indication as to what this committee are supposed to do because I understand they were involved in recommending that this legislation should be enacted. There are too many committees and too many familiar names popping up who used to hang around Departments and who are now on these committees. I do not want to see Government by committee, which is what this Government seem to want.

The Minister may not remember but, when I was Minister for Sport, there was a great hullabaloo about a national sports centre. My understanding was that the centre was to be located in the Custom House Docks site. We heard nothing about this lately and indeed I recall the Minister for Education — who was then in Opposition — leading a deputation to convince us that the national sports centre should be located in Athlone.

An Ceann Comhairle

I hesitate to interrupt the Deputy but it is clear that this is a short Bill designed to amend section 13 of the Landlord and Tenant (Amendment) Act, 1980, in relation to certain tenants in the Custom House docks area. It should not open up a wide discussion on the whole policy of the docks area project. I have given the Deputy some latitude but I must now indicate clearly that the Bill is short and confined and we ought to be slow to expand on it.

Mr. S. Barrett

I do not want to abuse your generosity. In expanding the argument of the principle of the Bill it was in the belief that we should amend the 1988 Act in relation to property. Therefore, the natural development of that argument would be that all the commercial activities relative to the project should be looked at in detail. However, I accept that I must be more specific. I was merely making the point that we had not heard anything about the national sports centre——

An Ceann Comhairle

The Deputy will appreciate he is entering into areas which are clearly not the responsibility of the Minister in the House.

Mr. S. Barrett

I am sure the Minister is aware of what is happening on a team basis and that they make collective decisions. The financial services committee, the Custom House Docks Development Authority and the IDA have promoted the centre.

As a member of the Cabinet, the Minister, having listened to some of the points being made in regard to this legislation might try to convince his colleagues that they ought to review the way in which they are promoting the centre and give the resources to the Authority rather than interfering by way of setting up committees which in my opinion only get in the way of the proper development of this area.

I will not be opposing this Bill, in fact my party welcome it. What we are looking for is an overall review of the 1980 Act in relation to commercial properties to see if rules and regulations which apply at present are standing in the way of investment and development which is badly needed if we are to create the jobs that are badly needed given that we have 250,000 people on the dole queue. To be positive and constructive, this type of change is needed. I am aware that it only relates to the financial services section of the Custom House Docks site but if the market is telling those who are trying to promote the area that their laws are out of line and is asking if they would please change them as it does not do business that way, we should make a change. If people are prepared to invest and enter into their own arrangements why should the Government interfere? As we have often said in the past there is too much government. Here is one example of people saying that there is too much government, it does not suit them and the law should be changed. That is what we are endeavouring to do here today. I will not be opposing such a move, in fact I welcome it.

I would like to thank you, a Cheann Comhairle, for allowing me to make a couple of other points in relation to the Custom House Docks site which may not strictly be relevant to the Bill and your generosity in allowing us to expand on a matter of some importance was very much appreciated. This debate also gives us the opportunity to knock a little bit of the Fianna Fáil propaganda. They have a great propaganda machine at present headed by the maestro, Mr. P. J. Mara. At times we have to get back to the facts and not allow the people to be fooled by reminding them that it was not this Government who did everything for this country. The Urban Renewal Act, which has proved to be a great success, along with the establishment of the Custom House Docks site were put in place by the previous Government, and our present telecommunications system was put in place by the Fine Gael and Labour Government of 1973-77 who made the necessary finance available. It also gives us the opportunity to remind the people that we are now beginning to make some progress, because some politicians on this side of the House want to behave in a responsible manner, and it presents us with the opportunity to make points such as those which are not often made by the media who seem to have taken a very passive approach in regard to criticism of the Government.

Miss Colley

Led by certain Opposition parties.

Mr. S. Barrett

Indeed, it seems that Ministers are being allowed to get away from appearing on programmes such as "Today Tonight" in connection with matters they have responsibility for. I recall when in Government that a week would not go by without there being a demand for a Minister to appear on that programme.

An Ceann Comhairle

The Deputy is now straying very far from the subject matter of this Bill.

Mr. S. Barrett

A debate such as this presents us with an opportunity to put the record straight. I did not get the opportunity to make a contribution to the budget debate as a few other things were happening and because of this I have had to make a few points which I feel are important. If the Minister introduces constructive legislation in order to get this country moving again so as to put those 250,000 people back to work, which is his job, we will support him.

Miss Colley

I am very happy to have been present in the House this morning to hear Deputy Barrett's contribution to the budget debate but getting back to the short Bill before the House, the Landlord and Tenant (Amendment) Bill, 1988, I would like to point out that the Progressive Democrats will not be opposing this Bill. We certainly support the idea of establishing a Financial Services Centre on the Custom House Docks site as we believe if it were to be successful it would be of benefit to the economic development of this city and country. We all wish that it will be successful and if the enactment of this legislation is necessary for it to succeed we will not oppose it. Nevertheless there are a number of questions I would like to ask in regard to the necessity for this legislation and what the outcome will be.

My first query, and the Minister did not refer to this in his speech, is why is there a need for this change. I would maintain that there is a more pressing need for real reform of landlord and tenant law, particularly as it relates to commercial premises. The Bill is designed in such a way that different types of lease may be offered and so as not to confine the lessees to the legal rights under the 1980 Act. I cannot understand therefore why the Bill does not contain a provision for renewal for a shorter term. If financial services companies do not wish to take 35 year leases, as that is not what they are used to doing in other countries, why does the Bill not state for these types of companies that a different type of lease will be on offer? I wonder if some effort is going to be made to pick and choose after companies have been tenants within the centre for some time. Perhaps an effort will be made to see if they measure up or the Government may wish to move this centre in a different direction. I have been given to understand that the reasoning behind this legislation is that the Government wish to ensure that the centre will be promoted in accordance with the overall plan which must be kept to. If that is the case I do not understand why this Bill has to be introduced. Surely, some control can be kept over the types of businesses that will be allowed to operate in the financial services centre.

Another query of mine relates to the provision in the Bill which states that the provisions of this Bill will only have effect for five years after it has been enacted unless changed by regulation introduced by the Minister. It has not been explained why this provision is contained in the Bill and I ask the Minister when replying to let us know the reason. It seems to be an illogical provision. This Bill does not fit neatly into anything. It gives no indication as to the way the Government are thinking in regard to landlord and tenant law. There is also the possibility that the Minister may come back into this House next week or the week after to say that he is going to shorten the period to a month or six months. There is no certainty. I do not understand why and I ask the Minister to explain why he has decided to take this route.

Another query of mine relates to a five year period. When this period has elapsed would those tenants in possession of leases be entitled to a renewal of their leases for a 35 year term, in other words, would we revert back to the provisions of normal landlord and tenant law? I would be interested to hear the Minister in his role as a member of the Cabinet with collective responsibility, give us some idea of the direction this Government think the financial services centre will take after the five year period is up. Where is this legislation going? What will the people who take leases under this legislation be doing in five years' time? Do the Government expect they will still be there? Do the Government expect a turnover of companies in and out of the Financial Services Centre? Do they want that to happen? In other words, the Minister should give us some kind of background. He gave legal background in his speech but there is nothing to satisfy my curiousity, to say the least, about what is in the Government's mind with regard to the centre.

It is reasonable in the context of this debate to point to the fact that there have been hiccups in the development of this centre, in its physical development and in its letting to various companies. There is disappointment that a greater number of lettings and companies is not involved as yet. Perhaps my colleague, Deputy Pat O'Malley, will give his opinion on that. If this Bill will improve further the chances of this centre taking off, filling a need and enticing the types of companies that might be enticed, fair enough. I see it quite properly on the Statute Book, but a number of queries are not answered in the Bill nor have they been answered by the Minister in his speech. I would be particularly interested to hear the Government's view on the kinds of companies they wish to entice in, the length of time they envisage those companies will remain in the centre and, after the effect of this legislation has lapsed, given it is not extended by the Minister, what will be the state of rights between landlord and tenant in this centre.

Overall we will not be opposing the Bill. I know we are taking all Stages today and I would like to put on the record of the House that neither I nor my party like that method of going about business in this House. A number of times it has led to real difficulties with legislation. There is no substitute for proper consideration of a Bill between Stages, be it a short or longer period. I hope we will not regret that we took all Stages of this Bill today.

Mr. McCartan

Like the other speakers, The Workers' Party will be supporting the Bill in principle. Nonetheless, we have some reservations with regard to its intended application and effect. To that end we are the only party who have tabled any amendment and will be seeking to address some of the reservations we have about the legislation and inquiring further into the impact of the legislation in a general way.

The first thing that has to be done in any debate is to put this issue in the context of the issue of the Custom House Docks site itself. This project once introduced by the Fianna Fáil Administration promised with great media attention that 2,000 jobs would be created in construction. Construction has begun and has reached the third floor or thereabouts of the building, but it is the very periphery of the site that is being developed, and that is a worrying aspect in itself. Ninety-six people are working on the site today and 28 of those come from the immediate inner city area. The prospect that the Custom House Docks site would be a major urban job creation project has not materialised. It was to have been a boost financially in immediate job terms to the people of the inner city area, and to the people in Dublin generally in view of the scale of the employment promised, but it has failed abysmally in that regard. We would be failing this House if in this debate, though limited to landlord and tenant conditions, that matter was not recorded, accentuated and underlined. I wonder why we are discussing a finite point about landlord and tenant provisions with regard to the site when we have only three floors of the outer part of the building standing and there is so much unemployment, deprivation and broken promises. Surely the Government are better able to order their priorities than to have us in here at this early stage, so remote from reality, talking about this finite point of legislation.

An Ceann Comhairle

That is the subject matter of the Bill before us this morning. I have given you some latitude but you must understand clearly we cannot debate the policy of the docks area in detail here today. This is not the opportune time.

Mr. McCartan

I accept that. I am prepared to move on.

An Ceann Comhairle

The Deputy will have to confine his remarks to the subject matter of this Bill which deals essentially with the landlord and tenant aspect of the matter appertaining to the Financial Services Centre located at the docks area. I am sure he will confine his remarks to that area.

Mr. McCartan

I intend to do so, but I find it difficult to open up on any issue with regard to the Custom House Docks without reminding ourselves what we are at. One reason we are here is the method by which the Minister has put this legislation before us. From his contribution it seems he listened to submissions from the Custom House Docks Development Authority, a statutory body set up to administer the site, and had discussions with the International Financial Services Centre Committee. I must admit I believed that might be, as suggested, a body of some international dimension. Deputy Barrett perhaps has a better insight into that because he suggested that committee were set up to help the Taoiseach have a say in on, to interfere with, the business of the authority. I do not think this House has heard about this committee in previous debates.

If I am wrong I am open to correction by the Minister, but this is probably the first time any member of the Government has come before us to tell us about the International Financial Services Centre Committee. However, the name at least is on the floor of the House now and maybe the Minister in reply can tell us a bit more about the composition and responsibilities of that committee and to whom they are answerable. Have they a quasi or statutory basis? Are they an interdepartmental body? Who are the members? To whom do they report? To whom are they responsible?

A signal failure in the whole approach to the development of the Custom House Docks and any legislation that might deal with its administration and development is the failure to have discussions with the single most important authority with whom they will have dealings, that is, Dublin Corporation, the elected local authority who are concerned about anything that goes on in this city. At the moment they are in the process of finalising a draft development plan for the city.

An Ceann Comhairle

I must again ask the Deputy to come back to the subject matter of the Bill before the House. The Deputy is straying very far.

Mr. McCartan

I appreciate I am subject to your ruling.

An Ceann Comhairle

The Deputy has not referred to the landlord and tenant aspect of the Bill.

Mr. McCartan

I have been on my feet for five minutes but I have listened to other Members making what could be described as a budget contribution.

An Ceann Comhairle

The Deputy has also heard the Chair admonish them and tell them they were out of order.

Mr. McCartan

After 20 minutes of listening to them.

An Ceann Comhairle

I have given the Deputy quite some latitude but, clearly, he is not respecting the wishes of the Chair in this matter.

Mr. McCartan

I am attempting to come to my point and I beg the indulgence of the Chair for a moment. The Minister is attempting to introduce legislation which will have a profound effect on the landlord and tenant relationships within the Custom House Docks site. That, in turn, will affect the development of that site. My concern is that it is not a site in satellite, that it will be part of the city of Dublin.

An Ceann Comhairle

I am not going to allow the Deputy to circumvent my ruling in that regard. If the Deputy wishes to enter into the area of policy in regard to the docks area he will have to find another time to do so.

Mr. McCartan

The rules of landlord and tenant have to do with policy.

An Ceann Comhairle

This short Bill seeks to amend section 13 of the Landlord and Tenant (Amendment) Act, 1980, with particular reference to the services companies locating in the Custom House Docks area.

Mr. McCartan

And the people who live there.

An Ceann Comhairle

That is an extension the Deputy is bringing into the debate.

Mr. McCartan

It is not, with the greatest respect.

An Ceann Comhairle

The Bill is not aimed at other kinds of tenants, for example, shopkeepers, restaurateurs and so on.

Mr. McCartan

That is what the Minister claims and I do not accept that.

Mr. Collins

Of course the Deputy does not.

An Ceann Comhairle

Let us have relevance.

Mr. McCartan

Perhaps I should start at the other end of the points I want to make in order to explain the concerns The Workers' Party have about the legislation. The Minister told us that the Bill is aimed only at financial services companies locating in the Custom House Docks area and in our amendment, which has been circulated, we are seeking to delete section 1 (b) (ii) because it affects more than financial services companies locating in that area. To make my point in regard to this I should like to try to explain how arrangements between the Authority and companies locating in that area will operate. It is envisaged by the Minister that there will be multi-facet tenancies and that there will be tenancies which he has described as consisting of or including a relevant trading operation within the meaning of section 39B, inserted by section 30 of the Finance Act, 1987, in effect financial companies. Paragraph (b) recognises that tenancies can be created as a financial services tenancy, the simple definition used under paragraph (a), which can commence as such a tenancy but may drift into or become something different. I understand that is covered under paragraph (b) (i). I understand also that paragraph (b) (ii) attempts to address a third type of tenancy that could or will exist within the curtilage of the area. It states, "a tenament under any other lease or contract." In my view that has been included to deal with those who will be employees or persons involved in the activities of a financial services company who may live in or on part or all of the premises retained by the company.

Clearly, the Bill recognises multi-facet tenancies. It envisages that there will be in time, or at the outset, people living there who may have had an association with a financial services company, may have left that employment and sought to stay on in the accommodation. It often happens in inner city development, that a business interest takes occupation of a building on a general lease from a developer and reserves part of the upper floors, in particular, for occupational living purposes and rents that living accommodation to other tenants, not necessarily connected with the activities of the company. There is a very good example of that in the Irish Life Centre on the other side of the Custom House building. Such tenancies are welcome and useful but I am worried if we are taking away any rights or protections that might exist under existing landlord and tenant law, as originated in the 1931 Act, and before, and incorporated in the 1980 Act. Those people might be part of the second and third type of tenancies I have referred to.

If I am allowed, I should like to state that Dublin Corporation in their draft development plan seek to promote that type of mixed use of inner city buildings. They have a concern to see that the Custom House Docks area does not become an anaesthetised satellite of some authority's imagination and that it will be part of a living city. The way to do that is to extend the principles of development they have set down in their draft development plan into that site, to link it into what the corporation are doing in the surrounding area. My question is, to what extent does the Bill interfere with those proposals and arrangements? To what extent does the Minister's proposal represent an isolation of the development at the Custom House Docks site away from its hinterland? We are concerned that the Bill does not give adequate protection to multi-facet tenancies. The principle that the Authority should retain dominion over the business aspect of the site, as provided in paragraph (a) of section 1, is good so that there should not be propriety rights accruing under existing legislation to simple business interests but there are further and more significant considerations to be given to the other types of tenancies. I have referred to those the Minister has sought to address in paragraph (b) (i) and (ii). It is because paragraph (i) is linked to what was originally a financial services company lease that we recognise the importance of retaining that provision but paragraph (ii) relates to a tenancy or any other lease or contract. We consider that that relates particularly to occupational rights of people who might be living within the curtilages and it is because of that that we are expressing concern. Our amendment seeks to deal with that matter.

An Ceann Comhairle

I suggest to the Deputy that the detail he is entering into would be more appropriate when he comes to dealing with his amendment on Committee Stage.

Mr. McCartan

We are not satisfied with the Minister's statement which was to the effect that only financial services companies will be affected by the legislation. There is more to the provisions than simply dealing with the rights of the landlord vis-à-vis trading companies. I hope the Minister will address that matter when replying. I do not intend to take much longer; in fact, I do not believe I will be allowed stay up much longer. In relation to occupational areas how will paragraph (b) affect them?

In relation to a drafting point I would like the Minister's view on how his addition to section 13 of the 1980 Bill can fit in? The original section 13 deals with the conditions with regard to tenements. In fact Part II of the 1980 Act deals in general terms with tenements. Section 13 is the basic reincorporation of existing laws with regard to tenements — that persons will be entitled to a business lease after three years or an occupational lease after 20 years, or to compensation for improvements if occupancy must be given up. The definition of tenement is given in the 1980 Act under section 5 which describes tenement as a premises complying with the following conditions and it goes on to give the conditions.

Section 5 (a) (iv) outlines specific requirements which suggest that a tenement is a premises let under contract of tenancy and such tenancy of contract is not:

a letting which is made and expressed to be made for the temporary convenience of the lessor or lessee and (if made after the Act of 1931) stating the nature of the temporary convenience; and

(v) such contract of tenancy is not a letting made for or dependent on the continuance in any office, employment or appointment of the person taking the letting;

The 1980 Act specifically envisages tenements as not including contracts or lettings that are subject to temporary convenience on the one hand or dependent on the continuation in any office, employment or appointment. That seems to cover what the Minister is trying to achieve by making tenancy dependent on the continuation of any office or employment, namely, a financial trading services company. In another way the sections on occupancy would be akin to temporary convenience on the lease. Has the Parliamentary draftsman considered that they are trying to put in this Bill an amendment to that Act which is completely at variance with the existing definitions of a tenement or lease on a tenement and whether the better approach might have been to simply draw up separate composite legislation to delineate the rights of tenants within the Custom House Docks area itself. My question in part takes up the suggestions made by some of the previous contributors that the legislation is somewhat miss and hit and that perhaps it is time for us to have a major review of legislation with regard to business leases. A major problem exists as I am sure the Minister is aware——

An Leas-Cheann Comhairle

The Deputy will appreciate that this is not the opportunity to indulge in other major problems. The debate now should refer to what is proposed in this legislation.

Mr. McCartan

I am referring to that.

An Leas-Cheann Comhairle

The Deputy indicated that he was going to refer to other major problems that existed. Perhaps the Deputy would like to keep in mind the relevance of what he is going to say to what is before the House. The Deputy will appreciate that it is the obligation of the Chair to remind Deputies of that position.

Mr. McCartan

In a mixed development site like the Custom House Docks area the problem that might develop is that simple premises originally designed for occupation in connection with the activities and enterprises on site would simply become vacant as has happened in relation to business premise development in other areas of the city. In any consultation with Dublin Corporation, the local authority in question, one would be advised that that is a problem which bedevils virtually every major shopping street of the city where the upper floors lie vacant.

The landlord and tenant law is a disincentive to the landlord to lease or it does not offer sufficient protection to the tenant because of the nature of the leases and the enterprises involved. The worry is that that blight will extend into the very fine proposals in place for the Custom House Docks area. We are worried that the legislation being put in place today with regard to the second and third type of tenancy, but particularly with regard to the third type of tenancy, confined to occupancy only, would facilitate the spread of the blight of other inner city areas to the new Custom House Docks area. That is something none of us wants to happen. I hope the Minister, in response, can reassure the House on that point.

Mr. P. O'Malley

I have taken an interest in the Custom House Docks development and I am at a loss to understand the necessity for this legislation which will confer a unique right on the lessor in the Custom House Docks area to not renew leases at the end of a term. As the law stands, anybody who has a business letting in excess of three years is entitled at the end of that period to seek a renewal of the lease. What this measure proposes to do is to eliminate that right and that would apply uniquely to buildings in the Financial Services Centre of the Custom House Docks development. I do not know from where the pressure is coming for that change to be brought about. Perhaps in replying the Minister will enlighten me on that aspect.

The Minister in his speech said that this is to facilitate the take-up of accommodation on the site and reduce any impediments there may be to entering into lease agreements with companies, particularly foreign companies. Normally, in Ireland and in the UK the practice is to offer 35-year leases with five year reviews for commercial property. Under that system a landlord can lay down a long-term commercial investment that will be reviewed upwards on a regular basis to reflect growth in the rental market. I accept the Minister's point that foreign companies are not familiar with the 35-year lease and that they tend to look for a much shorter lease but they always know that at the end of the term they can get a new lease and pay the going rate at that time. What I am really suggesting to the Minister is that the balance of advantage in changing the law, as proposed, has nothing to do with facilitating the tenant or indeed in helping to attract companies into the centre, as we might be led to believe. In my opinion it is geared much more to protecting the landlord's interests. If a landlord has to grant a short lease obviously that will affect his investment portfolio. However, if he is forced to grant a short lease — because that is what the foreign tenant will want — it will suit him to have this amendment passed because he will then be in a much stronger position to lay down the term of any new lease he grants. Indeed it cuts out the hassle and delay that could arise in having a court decide what should be the level of the rent. It also relieves him of the necessity of applying to the court for a review of the rent at five yearly intervals. Institutional investors do not like to deal in that way. They prefer to have a more clear cut system directly under their control. It is important that we be quite clear that this amendment of the law is proposed to suit the landlord and not the incoming tenant because, as I have outlined, all of the attendant advantage lies with the landlord.

As I understand it, the Custom House Docks Development Authority own the freehold of the land and a development consortium are building the facility under licence; according as they complete units on the site they will be granted a two hundred-year lease and will then sublet the accommodation they build to incoming tenants, presumably with the overall approval of the superior landlord, namely, the Custom House Docks Authority. If a consortium which must fund the building costs has not sufficient capital and has to seek bank funding for the project obviously the bank will look very closely at the commercial risks involved; from a cashflow point of view they will have to be satisfied that the projected rental income is realistic and, in particular, that there will be no hiccups at the time of the rental review.

I suspect that the pressure for the change in the legislation before us today arises from a perceived difficulty of that nature. As I have already said, it has nothing whatever to do with enhancing the prospects of bringing in foreign tenants to the centre.

It has been reported that some Irish banks, instead of leasing properties, in the centre, will buy out the buildings. Of course such a cash injection would be a welcome feature for a developer in that it would relieve any cashflow problems that might arise. But of course the incoming institutional investor who will now end up owning the facility, presumably, will want to sublet part of it. Again, he would be very keen that the amendment of the existing legislation we are discussing today would be enacted, again for the reasons I have outlined, that it suits him in his capacity as a landlord and has nothing whatever to do with suiting the incoming tenant.

In relation to the Custom House Docks site there is the overall difficulty of getting information about the development of the project and the success in attracting tenants to occupy the units at present being built there. As others have said, the Government have held up this development as a premier project. It is supposed to be fully operational and generate 7,500 jobs within a five-year period. It is my understanding that that five-year period commenced on the date on which the master project agreement was signed with the development consortium. I know the Taoiseach has taken a particular interest in it. He has stated that he will take whatever action is necessary at Government and administrative level to ensure that no obstacle or difficulty will be allowed to prevent its overall success. Like others, I and my party are very keen that the development be successful. But, if we are to measure its rate of success to date, there is not a lot of comfort to be gained because the commitments given to take up space, particularly in the Financial Services Centre — and this was information furnished to me by way of a question I had tabled to the Minister for Finance earlier this week — will involve the creation of 227 jobs by the 11 companies who have already given a commitment to locate in the centre. I understand there are an additional 870 jobs approximately in the pipeline for companies awaiting approval. The reality is that a very small number of jobs have been committed to the centre at this point. Many applicants who have been approved are Irish companies already operating in the financial services business so that, to some extent, probably it will involve a transfer of jobs as distinct from creating new ones. No major international company has given a commitment to take up accommodation in the centre. The Minister, in introducing this Bill, has told us that its provisions will facilitate such a major investor, or certainly a foreign investor, in taking up accommodation on the site.

There are very generous incentives on offer at the centre. In December last the Government announced that they were considering further enhancing those incentives by the introduction of a zero rate of tax for certain activities to be carried out in the International Financial Services Centre but I note there was no budgetary provision to accommodate the introduction of such a tax rate. The point to make, in relation to the way we are endeavouring to enhance the prospects of taking people on board, is that really every possible incentive has been thrown at the centre to render it successful, including the amending legislation we are asked to pass here today. The State is foregoing all types of revenue. If the centre is to be successful the only thing that will be in it from the point of view of the State will be the creation of new jobs. Of course that is welcome in itself but we seem to have foregone every other possibility of recouping anything from the development there because we have created such very attractive incentives.

We all wish the project success. I have no desire to say anything that would damage its prospects but I am aware that certain efforts on the part of a member of the Government to secure a much needed big name for the centre has resulted in a court action at present being held in camera before the Supreme Court. Its outcome could have very serious consequences for the whole future of the Custom House Docks development. The Custom House Docks Development Authority have been given a very specific mandate to secure the successful development of this project within a five-year period.

They were established under the Urban Renewal Act 1986 and have been given considerable powers under section 9 (7) of that Act. It appears to me that they are, in many respects, answerable to nobody because on previous occasions when I have put down questions in this House to try to elicit information in relation to the development that is going on down at the Custom House Docks I have had the reply back from the Ceann Comhairle's office that the Minister has refused to accept the question on the grounds that he has no responsibility to the Dáil for the information I was seeking. That is very unsatisfactory because there have been many rumours to the effect that this development was not going as well as it should. The purpose of my questions was to enable the Government or one of the Ministers to use the opportunity of replying to the questions to confirm that these rumours did not have any substance. I felt it was essential that that opportunity should be availed of so as to dispel any doubt about the viability of the project and maintain national and international confidence in the project. I am at a loss to understand why the Government and the various Ministers have been so reluctant to state that positively in this House.

The Minister refused also to confirm that he had full confidence in the board of the Authority. I would have thought that if things were going as well as they should have been that these matters——

An Leas-Cheann Comhairle

Deputy O'Malley is a little out in the long grass. Could I get him back onto the tracks?

Mr. P. O'Malley

The legislation we are dealing with specifically deals with financial services in the Financial Services Centre in the Custom House Docks site.

An Leas-Cheann Comhairle

That specific reference is to a five-year period in respect of leases.

Mr. P. O'Malley

The Minister has introduced amending legislation here this morning ostensibly, and he has said it in his speech, to enhance the development potential of this site and to ensure that everything will be done to bring about that very desirable situation. There are other aspects that I am dealing with but I would suggest to you, a Leas-Cheann Comhairle, that they are very relevant to the matter we are considering here this morning.

An Leas-Cheann Comhairle

The debate requires that we confine ourselves to what is in the Bill. Inevitably there will have to be peripheral reference to policies attaching to the project so long as we do not dwell too long on them.

Mr. P. O'Malley

I have not been on my feet that long and I do not intend to be very long more. I am highlighting the fact that I think it is important that this House should be given full and frank information when it is required about the success or otherwise of this development. It has been widely reported that there have been difficulties with the project and the Minister has been reported as being unsatisfied with the consortium that won the contract to develop the project. He has refused to confirm that he is satisfied with them. In an interview in one of the national newspapers he has accepted that there was substance to the rumours and that the project has fallen behind schedule, that there was one office block building that should have been started that has not yet been started. Obviously such developments could have very serious consequences for the success or otherwise of the whole Custom House Docks development.

What I am really highlighting is that everybody in this House would wish the development to be successful and if there are problems there we should be told of them. I have adverted to some of them and I have told you, a Leas-Cheann Comhairle, that when I have tried to raise it in this House the Minister refused to reply. Also, this is the only time at which we have had an opportunity to debate any matter relating to the Custom House Docks site. The Chair can well understand that I would try to utilise this opportunity to press the Government to give us the information we require.

An Leas-Cheann Comhairle

The Chair may well understand but cannot condone it. Unfortunately the legislation is confined legislation and that ipso facto requires that people who make contributions will be so restrained. It is not the case that because it refers to a particular development that gives us an opportunity to discuss that development. We must act in accordance with Standing Orders that requires us to speak on what is the proposed legislation.

Mr. P. O'Malley

I accept that, but perhaps I would have a mild difference with the Chair on the basis that I am actually doing what he wants me to do. I just want to highlight that I would like to hear from the Government side replies to the points I have made, particularly in relation to the fact that there are difficulties with this development. I have adverted to action taken by a Minister which could have very serious consequences for the whole development of the Custom House Docks site. I do not understand why there is the reluctance on the part of the Government or any of the Minister to give this information. The Government are forever telling us what a wonderful project it is and the Taoiseach has taken a major interest in it. They are supposed to create 7,500 jobs at the end of the five years. I just wonder whether this is another Government aspiration and whether it will ever actually be translated into reality. We all wish that it will. I will await the Minister's reply and I am very hopeful that he will take up some of the points I made and address them for me.

Minister for Justice (Mr. Collins)

I thank the Deputies who, in general, have welcomed the Bill and supported it. Of course, as has been pointed out on a number of occasions during the debate, the scope of this Bill is confined to leases made with international financial services companies in the docks area. It will create a legal environment in which those companies can have medium-term leases of the kind that is not, for commercial reasons, feasible under the existing law but is available elsewhere. At the same time the lessor, that is, companies who have bought the buildings for letting purposes will be free to grant those leases in a way that will help to protect their heavy investment in the Financial Services Centre. By any standards the pace which has been set for the developments of the docks area is remarkable.

Mr. P. O'Malley

It is remarkably slow.

Mr. Collins

Those who are familiar with the area will have seen for themselves how the Financial Services Centre building is rising day by day. Since the proposal for the centre was conceived a little over 21 months ago, 53 financial services companies have formally applied to establish there. To date 48 of those that have approval in principle, five are at a preliminary stage of approval, 23 have already begun operations prior to being located in the centre, and the centre will be completed in September of this year. When the companies have arranged for the fitting out of the premises to meet their needs they will begin to trade in the centre a few months after that.

Deputies Barrett and Colley suggested that similar legislation should apply to other business tenants. I referred in my opening speech to the submissions I have had from various quarters for increasing the present three year period of occupation that is required by business tenants to gain a statutory right to a new tenancy. The type of change being sought and the reasons for the change differ in some cases. The matter is not straightforward and there is general agreement on this, and because any such change would be of general application to business tenants the issues are not as readily identifiable or capable of resolution as in the case with the Financial Services Centre. I shall be dealing with this matter, and indeed other landlord and tenant matters, as soon as possible having regard to the various matters of priority in the law with which my Department are concerned.

Deputy Barrett spoke about the possibility of allowing commercial enterprises to opt out of the 1908 Act. This, of course, is one of the options that will be looked at in the context of the overall review of the 1980 provisions which I have already said will be undertaken.

The Custom House Docks Authority have a five-year master project planned for the development of the Custom House Docks site, and in that context the Authority suggested that the legislation should be given an initial life of five years. This is provided for in the Bill. This point was raised by Deputy Colley. Under the Bill the Minister could, by order, extend the operation of the amendment to cover leases made after that period and any such order, as I have already said, would first have to be approved by both Houses of the Oireachtas. Contrary to what Deputy Colley suggested, the Bill only enables the Minister to extend the five year period and not to shorten it.

In relation to Deputy McCartan's point about paragraph (b) (ii) of new subsection (3), this merely relates to subleases of leases of tenants in the centre which were made for the purpose of carrying on financial services. It has nothing to do with private accommodation or other classes of business, apart from financial services, and to say otherwise is misreading the provisions of the Bill. In regard to section 5 of the 1980 Act, I think Deputy McCartan has misread the meaning of paragraph (a) of subsection (1) of that section. A tenancy for or dependent on the continuance in any office, employment or appointment of the person taking the letting, relates to a person who takes the job with which there is associated accommodation, for instance, a bank manager in a rural area.

The existing law would not meet fully the needs of either development companies or lessors or financial services companies as lessees in the docks' area. This Bill will achieve two purposes. It will enable financial services companies to have leases for a term that does not normally apply to business premises in this country and it will also enable lessors in the docks' area to protect and control their investment in premises which are leased to those financial services companies.

Miss Colley

They could do that by convenant in the lease.

Mr. Collins

The existing law would in effect permit only two kinds of leases to be offered to financial services companies, that is, a lease for a term under three years which under existing law would not give a right to renewal, or a lease for more than that period with a right to renewal.

Mr. McCartan

What is wrong with that?

Mr. Collins

As regards the latter, however, commercial lettings are normally granted for about 30 years so as to protect the lessor's large financial investment in the premises. Furthermore, lessors, having made a large financial investment, naturally wish to retain control of that investment. If, for example, they were to grant a medium-term lease of five to ten years under existing law, a right to a new statutory lease of 35 years would accrue. Statutory leases of this nature allow applications to court to fix rent and so on and lessors would wish to avoid this because of delay and loss of control.

Mr. P. O'Malley

It reflects their investment portfolio.

Mr. Collins

On the other hand, international financial services companies are more concerned with having medium-term leases; they are not interested in long leases which could be costly to buy out. Neither are those companies interested in short lettings of under three years because they would find it difficult to recoup their start-up costs within that time. These, therefore, are features of commercial lettings under the law as it stands which would be inappropriate in the context of the particular needs of the development companies and financial services companies concerned. Apart from anything else, the kind of change in the law that is sought would bring it more into line with the law in other countries, as I have already said, such as the United States and on the continent where financial services companies operate.

This Bill was sought by the Custom House Docks Development Authority. I am glad it has received such a warm welcome from the Members who have contributed. I am sure it will help to get the Custom House Docks under way so successfully that even Deputy O'Malley will be pleased.

Question put and agreed to.