Dáil Éireann Debate, Thursday - 26 April 2012
2Deputy Peadar Tóibín asked the Minister for Jobs; Enterprise and Innovation if he will outline the steps he has taken to end the application of upward only rent clauses by State economic development bodies such as the Industrial Development Agency. [21033/12]
Amharc ar fhreagraSection 132 of the Land and Conveyancing Law Reform Act 2009, which provides for the abolition of upward-only rent reviews in commercial leases, became operative on 28 February 2010. The two enterprise agencies which report to my Department and have significant property portfolios, namely IDA Ireland and Shannon Development, have acted in accordance with the provisions of section 132 of the 2009 Act.
IDA Ireland has informed me that it currently has 73 occupational leases across its private finance building portfolio. Sixty-four of the leases were granted prior to 28 Feb 2010, at which time all IDA Ireland building leases would have contained upward-only rent reviews. From 28 February 2010, IDA Ireland's leases are linked to market rent and there are currently nine leases which were granted after 28 Feb 2010. Shannon Development has 48 long-term leases, 43 of which contain the upward-only rent review clause as they were entered into prior to February 2010.
Both agencies have confirmed that where businesses are in difficulties, they have, on a case by case basis, responded to and facilitated requests from companies for reduced rent and they will continue to do so.
The Government made a strong pledge in its programme for Government and even on Grafton Street that it would get rid of upward-only rents. The State spends €53 million on upward-only rent contracts. The State would save at least €8 million if it got rid of upward-only rents.
The retail sector has fallen off a cliff and 50,000 people have lost their jobs in that sector in the past four or five years and a further 30,000 jobs are in jeopardy.
The Minister states that those upward-only rents clauses were contracted prior to the 2010 date and the Government is reducing those rents on a case-by-case basis down to market levels. Will the Minister confirm there have been no further upward-only rent contracts are being used by the agencies under his remit? I have been informed that businesses continue to suffer under upward-only rent contracts on properties owned by departmental agencies.
It is my understanding that there has been no increase in rents by those agencies. However, I will seek further clarification and confirmation for the Deputy. He raises the wider issue of the Government's intention to seek to do away with upward-only rents. This matter is the responsibility of the Department of Justice and Equality but the advice of the Attorney General is that it was not possible to do away with these rents without the State or the taxpayer paying compensation to those who would be adversely affected.
The industrial agencies manage their portfolios with the knowledge of the pressures on businesses. As I outlined in my reply, they have responded in cases where clients have been in difficulties.
I understand that companies which are tenants of the agencies have had rent increases. I know of a business in Killybegs which has gone to the wall because of upward-only rents paid to a Government agency. Will the Minister guarantee that the agencies for which he is directly responsible and also all Government agencies with upward-only rent contracts with tenants will reduce rents to the current market rate?
I am not in a position to guarantee in respect of any reduction in upward-only rents. It is not possible for the Government to introduce a provision requiring landlords to reduce their rents to market levels. The legal advice is that it is not possible.
I am referring to Government agencies.
I am only responsible for agencies under my remit.
The Minister has collective responsibility.
I have no responsibility for the agencies. The Deputy has not offered details. If he wishes to send me information about the agency concerned I will raise it with the appropriate Minister. Every case can be different. I cannot issue diktats or guarantees but if the Deputy wishes to send details of a case about which he is concerned, I will bring it to the attention of the appropriate Minister.
