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Seanad Éireann debate -
Wednesday, 22 Feb 1989

Vol. 122 No. 3

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

Question proposed: "That the Bill be now read a Second Time."

The purpose of this short, though quite technical Bill, is to disapply section 13 (1) (a) and (b) of the Landlord and Tenant (Amendment) Act, 1980 in so far as financial services companies locating in the Custom House Docks area are concerned. That section gives a tenant, on the basis of certain prescribed periods of occupation, a right to a new tenancy, beginning on the termination of the previous tenancy. In the absence of agreement between the parties, the court fixes the terms of the new tenancy and that tenancy is for a 35 year term unless the tenant opts for a shorter term. It is not possible to contract out of the provisions of the 1980 Act.

It has been represented to me by the Custom House Docks Authority, which is the statutory authority charged with developing the Custom House Docks area, that the application of these provisions to the Financial Services Centre wold be satisfactory neither to landlord nor tenant and that it would be better if the parties had more flexibility to negotiate and agree on the length of the lease an the terms for its renewal. The new law, apart from meeting the needs of the parties concerned, will be similar to that in other countries where financial services companies operate, in particular, the US and many continental countries.

Before telling you about the provisions in the Bill, I should explain the existing law and elaborate on the reasons why it would not operate satisfactorily in the Financial Services Centre.

The existing law in relation to section 13 (1) (a) of the 1980 Act is that business tenants of three years standing are entitled to a new tenancy. Tenants in general have a similar right under section 13 (1) (b) where they have been in continuous occupation for 20 years. The period of three years has existed in legislation since 1931 and was chosen because it was felt that it would take that length of time on average to build up the goodwill of a business. 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 Act introduced for those tenants the right to a new tenancy instead of monetary compensation. The long occupation provision was originally 30 years under the 1931 Act and it has been 20 years since 1980.

There are a number of reasons for amending section 13. For commercial reasons only two kinds of leases are normally offered under present law, viz., a lease for a term under three years, which under existing law would not give a right to renewal, or a lease for far longer than that period, say 30 years, with a right to renewal. Business lettings are normally granted for that long length of time so as to protect the lessor's large financial investment in premises. Having made such an investment in premises, a company naturally wishes to retain control of that investment. That would not be the case if they were to grant a medium-term lease of say five to 15 years because under existing law, as I mentioned earlier, a tenant under such a lease has a right to a new tenancy of 35 years and applications to court to fix rent, etc. could be involved.

The position with regard to international financial services companies in other countries is that they go for medium-term leases of up to ten or 15 years duration. They would not be interested in the short leases of under three years which operate in this country. In all the circumstances, the features of business lettings under the law as it stands need to be changed to meet the particular needs of both landlord and tenant in the Financial Services Centre.

I turn now to the provisions of the Bill. Section 1 inserts additional subsections (3), (4) and (5) in section 13 of the 1980 Act. New subsection (3) (a) provides that occupation by a financial services company in the Docks area shall not be regarded as occupation for the purposes of section 13 and the effect will be to preclude those companies from a statutory right to renewal of a tenancy: at the same time it will enable the parties concerned to agree their own terms under a lease.

The provisions in new subsection (3) (b) are more or less technical. The effect of paragraph (b) (i) is that the status of the tenancy as one outside the scope of section 13 of the 1980 Act would not be affected where a financial services company ceased to carry on a relevant trading operation. Similarly under paragraph (b) (ii) where a financial services company sublets in the Financial Services Centre — it may have excess accommodation at the time of start-up — the sub-lessee will also not be entitled as of right to a new tenancy. In other words, a sub-lessee will not be able to acquire rights to renewal to which the lessee is not entitled. It is a common feature of leasing arrangements in general that the same rights and conditions should apply to the sub-lessee as applies to his immediate lessor.

Subsections (4) and (5) will mean that the legislation will affect only leases made during the period of five years after the passing of the Bill unless that period is extended to cover leases made after that period. The Custom House Docks Authority has requested this provision which will enable the Oireachtas as well as the Authority to take stock of the situation.

The scope of this Bill is limited to leases made in the Financial Services Centre in the Docks area and existing law will apply to other tenants who will be located in the Docks area, namely, residents, shopkeepers, restaurateurs, etc.

The existing law with regard to business tenants in general has been the subject of representations from various bodies who have requested an increase in the three year qualifying period for a right to a new tenancy. This is a matter, however, that needs to be examined further before any decisions are made.

I commend the Bill to the House.

When this Bill was introduced in the other House it was given a general welcome and, in fact, there was a non-contentious debate where all sides saw the reason for the legislation. I believe that will be the case in this House.

The Bill, as the Minister said, is basically a technical one which amends the Landlord and Tenant (Amendment) Act, 1980 to satisfy the needs and requirements of the Financial Services Centre in the Custom House Docks site. The earlier Act of 1980 allowed for only two kinds of leases, a short-term lease for less than three years which would not involve a right to renewal or a long-term lease with a right to renewal. However, experience in other countries is that the international financial services companies favour medium-term leases of 10 to 15 years duration and the Bill before us aims to fulfil that particular requirement or desire. The amendment to the 1980 Act will enable leases to be made with financial service companies in the Docks area without a statutory right to renewal of the tenancy accruing.

The reason this Bill is required at present is an indication of the extent to which so much of our legislation was designed in, not quite a pre-industrial age, but in an age where legislation was often not sufficiently responsive to the needs of industry. In this particular area, our legislation does not appear to be in line with that of many other countries at a similar state of economic development. Indeed, in order to attract European, Japanese and American companies, we must modernise much of our existing legislation. The Bill before us is attempting to remedy a situation where legislation can frequently hinder rather than foster foreign investment and interest in this country. I would like to see — this point was made by the Fine Gael spokesman in the other House, Deputy Sean Barrett — a complete review of the 1980 Act in relation to commercial properties.

This amendment to the 1980 Act should not just be confined to financial services companies operating in the Customs House Docks area. It should be extended to cover all commercial companies who feel they do not need the protection offered by the 1980 Act in relation to their commercial premises as they have agreed on a lease for a certain period. This is the situation which foreign investors are familar with in other countries and have a certain right to expect in this country.

I would be happier if this Bill were part of a more comprehensive measure which showed more evidence of long-term planning. I would like to see a complete 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. These two factors are crucial in the fight to create more jobs which must be the main priority of the Government and the main priority of every political party in this House.

I ask the Minister to reconsider the need to renew this legislation after five years as I cannot see why the Bill should have to be confined to a five-year period. This provision serves only to involve greater bureaucracy and may well be a waste of time as far as the Minister and his officials are concerned.

The Financial Services Centre is one of the most exciting prospects which has ever happened in this country. The idea did not begin with this Government. Urban renewal legislation was very much the work of former Minister, Deputy Boland, and former Minister of State, Deputy O'Brien, during the lifetime of the previous Government. The determination to renew our urban areas, beginning with the very heart of the capital, has the support of all groups and is badly needed in terms of tourism and the morale of people living in the capital city. The idea of marrying the renewal of the heart of the city with an exciting financial services area capable of attracting people back to this country, of creating well-paid jobs and, at the same time, of renewing the entire infrastructure of that area, is something which gives a great lift at this point in our history.

There can be no begrudgery. Everybody wants the Financial Services Centre to be a total and complete success. It can do for the city something on the scale achieved by the Wide Streets Commission in the last century. It can help to increase the prosperity and the tourist attraction of Dublin.

It is exciting for somebody like myself who travels in by the financial services area each day coming to this House to see the rate of progress, to see the bulldozers on the sites, to see the building going up and the idea taking shape. Those who pioneered this concept, those who brought the idea to Government and those in Government who adopted it and ran with it all deserve to be commended.

I would like to see a greater degree of openness on the part of the Custom House Docks Authority. I have total confidence in the probity and the ability of those who make up the Authority but I believe that some of the misleading and unhelpful comments of recent times in some of the newspapers could perhaps be avoided if a greater degree of information was made available, both as to the actual number of jobs which are there at present and the number of jobs which will realistically be created.

This legislation, if it helps to develop the Financial Services Centre, is certainly most welcome because this country, of all countries, is ideally suited for financial services. We have a young, well-educated, enthusiastic population of very bright young people who have shown in other countries that they can adapt extremely well to the whole world of financial services. Indeed, one of the problems which the financial services area may well face is the counter attractions of other countries who are not so well endowed with such well qualified young people and will be paying very high salaries and inducements to get them to work across the Channel and in Germany, Denmark and Holland.

The financial services area is one of the few expanding sectors where there are enormous employment opportunities for the future and we must fully exploit it in a truly national way and not allow it to pass by. We must continue to encourage investment in Ireland by Europeans, Japanese and Americans and we must help them in setting up their business.

I would like to raise one point which is not totally germane to this technical Bill. I refer to the extent to which the development of the Financial Services Centre will fit into the overall integrated development plan for Dublin city being devised by Dublin Corporation. As a member of the corporation I feel that at times there is not sufficient dialogue between the Custom House Docks Authority people and the corporation. It is a point I would like to flag at this stage because it would be a pity if two sets of plans were going ahead without sufficient overlap and consultation between the groups concerned.

I welcome this Bill as a step in the right direction. I would like to see more comprehensive legislation but nonetheless I welcome the changes in the 1980 Act in a way which will facilitate the development of the Customs House Docks area.

This is a short Bill to amend section 13 of the Landlord and Tenant (Amendment) Act of 1980. It applies to certain types of tenants in the Custom House Docks site. Basically, the aim of the Bill will be to allow the various financial service groupings the statutory right to the renewal of thier tenancies. One could almost say it is not a pure tenant and landlord measure in the way we have known landlord and tenants Bills over the past number of years. This one excludes the usual forms of trades such as shops, retail outlets and residential flats. Indeed, when we talk about landlord and tenant Bills it is the area we tend to discuss, but in this case we have something totally different in mind. Nonetheless this legislation, while it applies to specific financial services companies at the docks site, is important and the Minister has seen fit to bring it forward.

Under the 1931 Act, the business tenant can get a new tenancy for a period of 35 years if he has been the tenant previously for 3 years. I am aware that in other countries international financial services companies in those areas would prefer longer leases for ten or more years, but this Bill specifically provides that the lease should be for a period of five years and I am sure we will have some debate on Committee Stage on that aspect. It is important that the period can be extended, as I have no doubt it will, by regulation made by the Minister of Justice of the day, subject to the approval of the Houses of the Oireachtas. This is important because in time to come it will allow the Oireachtas a further opportunity to debate the full issue in hindsight and in the knowledge of what has happened in past years. It will be debated in a reasonable time. They can sit back and examine the problem and make improvements where necessary.

The Bill is basically a technical Bill, as the Minister has indicated, to satisfy the modern-day needs of the new financial services area in Dublin. Hopefully, the centre will be a huge success. We have a real vested interest to make this Financial Services Centre very successful. Clearly, the advantages to the economic life of this city and country of such a service can be enormous. Senator Manning referred to the fact that we are well geared for such an institution with the type of well-educated, young people we have in our midst.

The change requested in this Landlord and Tenant (Amendment) Bill, 1988 is minor, as the Minister clearly outlined, but at the same time it is important and has to be done. It goes without saying that I support the broad thrust of the Bill and I have no hesitation in recommending it.

I thank Senators for their contributions on Second Stage of the Bill. The support which they so generously have given the Bill is, indeed, very welcome. The demands for similar legislation to be extended to all business lettings or to allow parties to such lettings to opt out of the provision of the 1980 Act are, as I have already said, to be examined further. These are matters which require separate consideration and Senators will appreciate that a very wide range of interests will have to be taken into account.

As of now, 53 financial services companies have formally applied to establish on the docks area; 50 of those companies have been approved in principle and the others are at a preliminary stage of approval. The financial centre building will be completed in September 1989. It will then have to be fitted out to suit the particular needs of each tenant. Given that the centre was conceived 21 months ago, I think Members will agree that the progress made to date on all fronts is excellent by any standards. I thank Senator Manning for his remarks in this regard.

The view of the Custom House Docks Authority is that this legislation will remove provisions in the law which are inappropriate in the context of the Financial Services Centre and which adversely affect the promotion of that centre. Senators Manning and Fallon mentioned the limitation of five years on this legislation, unless renewed. The Authority have a five-year master project plan for the development of the Custom House Docks site. In that context the Authority suggested that the legislation should be given an initial life of five years and this is provided for in the Bill. 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 would first have to be approved by both Houses of the Oireachtas.

I thank the Senators for the welcome given to this technical but extremely important Bill.

Question put and agreed to.
Agreed to take remaining Stages today.
Bill put through Committee, reported without amendment, received for final consideration and passed.