Dáil Éireann Debate, Tuesday - 12 February 2013
119. Deputy Thomas Pringle asked the Minister for Agriculture, Food and the Marine the number of rent reductions that have been negotiated between tenants in fishery harbour centres and his Department in each of the past two years; and if he will make a statement on the matter. [6919/13]
View answerThe Department of Agriculture, Food and the Marine owns and operates under statute six fishery harbour centres at Killybegs, Ros a' Mhíl, Dingle, Castletownbere, Dunmore East and Howth. Properties located in the fishery harbour centres are offered for tenancy under lease or licence agreements when appropriate. An individual agreement, which is a formal document and is legally binding on both parties, is voluntarily signed at the outset by the tenant. The Department has approximately 140 property agreements in place in the six fisheries harbours.
Property agreements are complex instruments. The specific terms of the agreements held with the Department vary. Approximately 80 of the property agreements that are in place do not contain rent review clauses which require rent to be static or increased in the subsequent period. These agreements include short-term licence agreements and pending lease agreements. Any property agreements that were entered into after to the application of section 132 of the Land and Conveyancing Law Reform Act 2009 contain rent review clauses in which the rent payable following the review may be fixed at an amount which is less than, greater than or the same as the amount of rent payable immediately prior to the date on which the rent falls to be reviewed. Approximately 60 lease agreements contain rent review clauses which require static or increased rent to be applied for the subsequent period. All of the property agreements that contain such rent review clauses were signed prior to the application of section 132 of the 2009 Act. These agreements generally require rent reviews to be conducted every five years. The most recent round of rent reviews on these agreements related to the period up to mid-2008. A number of the rental valuations determined by the qualified valuer, who was appointed by the Department following a tender competition, were disputed by the tenants. The rent review dispute procedures set out in the tenants' leases were followed. In some cases, the independent experts recommended a decrease in the revised valuation determined by the valuer acting on behalf of the Department.
I am acutely aware of the economic situation facing businesses and small enterprises. Following the completion of rent reviews due for the period up to mid-2008, I decided in 2011 that no rent reviews would be carried out for years subsequent to 2008 and that zero rent increases would apply across the board. I have recently decided to continue this approach for rent reviews due in 2013. A zero rent increase will be applied in all such cases. In other words, we are providing for a practical response. When a rent review takes place, we are entitled in law to consider either an increase or a retention of the same rent. We have decided that the easiest way to deal with this is by not reviewing the rents so that they do not increase for the tenants in question.
It may be a practical response, but it does not go far enough. No one is more aware than the Minister of how circumstances have changed since the last reviews were done in 2008. Many businesses are struggling to meet rents that were set at peak market values. Perhaps the Department, as an extension of this process, can take a proactive view of the possibility of reducing those rents where that can be justified. I think that would go a long way towards enabling people to preserve their businesses. It might even give them room to expand their businesses and create jobs. In advance of the last general election, Fine Gael proposed the implementation of such a process, which would be the fairest way of going forward in this area.
We have looked at the Deputy's proposal, but it is not as easy as it might seem. When a lease is signed that does not contain a mechanism whereby the level of rent can be reduced - it must stay as it is or increase - it is not straightforward from a legal point of view to reduce that rent. In order to ensure both sides do not have to go through the cost and hassle of the process of arbitration on the agreement of valuations and rents, etc., I have decided that the easiest way to proceed for the moment is by simply not having reviews. That gives tenants some certainty that their rents are not going to increase. I think it is a reasonable response in the circumstances.
If there is a case to be made that we are overcharging for rent, we need to look at that. However, whenever rent reviews have been carried out, there have been recommendations for rent increases, and I do not believe that is appropriate given the pressures many businesses are under at present.
Clearly, if there was movement on both sides whereby the tenant and the landlord agreed to examine the process, it would be possible to arrive at a situation in which both sides agreed to reduce the rent in the vital interest of keeping a business in place and giving it the opportunity to create extra jobs and be more sustainable. There needs to be a will within the Department, however. If there is a will, there will definitely be a way and both sides can agree to alter the terms of the lease and arrive at a rent that would be agreeable to both.
We need to balance two things. First, we need to ensure we are not charging rents that are over the top for businesses. Second, we need to run six fisheries harbours in a businesslike manner so they can pay for themselves, if possible, and pay for the investment that is and has been needed over the years. We are trying to balance our obligation as a landlord to be fair to the tenants and do all we can to keep them in business by not applying rents that are over the top with the requirement to obtain an acceptable commercial income from all of the tenancies within our harbours. We are trying to balance those two priorities. This is why I have tried to give certainty to businesses by saying we will not go through the rent review process. The point I am making is that some of the rent reviews we went ahead with actually recommended an increase in rent, so just because a review is carried out by an independent assessor, it does not necessarily mean we will get a recommendation to reduce rent. Of course tenants will want lower rent all the time but I have to run the harbours in a businesslike commercial manner so I can invest in those harbours and, at the same time, not treat tenants unfairly. That is why I believe that putting off rent reviews in order to essentially freeze rent for the foreseeable future is a reasonable way to proceed.
