Upwards Only Rent And The Upper House

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0007f088-642Last night the Government lost the vote in the Seanad on the Upwards Only Rent Review Bill 2013.

We asked Legal Coffee Drinker what’s it all about.

Broadsheet: “Legal Coffee Drinker, what’s the Upwards Only Rent (Clauses and Reviews) Bill 2013 all about?”

Legal Coffee Drinker: “It’s a Bill, initiated by Senator Fergal Quinn [above], designed to abolish upwards only rent review clauses in pre-2010 leases.”

Broadsheet: “Upwards only rent review clauses?”

Legal Coffee Drinker: “Most commercial leases provide for five-yearly rent reviews. An upwards only rent review clauses is a clause which provides that the rent on review cannot fall below previous rent or rents. It is designed to protect landlords in a falling rent market but can be extremely harsh on tenants.”

Broadsheet: “Upwards only rents? In this market? How come these clauses haven’t been abolished already?”

Legal Coffee Drinker: “Well, it’s not for want of people asking the Government to abolish them. In 2009 legislation was enacted prohibiting upwards-only rent review clauses in post-2010 leases; but by 2010 most tenants knew better than to agree to a upwards-only rent review clause anyway…
“What no Government to date (despite pre-election promises) has been prepared to do is invalidate upwards only rent review clauses in pre-2009 Act leases, which are the ones causing the real harshness.
“One reason given for this is possible unconstitutionality in interfering with parties’ rights and obligations. Another possible reason is that the Govenment doesn’t want to annoy lenders who granted mortgages in the belief that these clauses guaranteed rents. Of course, they don’t really, because a landlord, no matter how much the law is in their favour or how good their legal team, can’t get money off a tenant which that tenant doesn’t have.”

Broadsheet: “So the new Bill? What does that do?”

Legal Coffee Drinker:“Initiated by Senator Fergal Quinn, it does precisely what the Government was asked to do, and didn’t – it abolishes upwards-only rent review clauses altogether.”

Broadsheet: “And yesterday the Seanad voted in favour of the Bill, despite the Government specifically asking them to vote against it. What’s the significance of that?”

Legal Coffee Drinker: “One of the main criticisms of the Seanad, put forward by the ‘Yes’ campaign in the Referendum, is that it has no useful purpose and will never act differently from the Government, because the Government controls its composition and can therefore always secure a majority vote.
“This is an argument which was made on a previous thread, and it’s not an entirely unfair one given the history of the Seanad – there are only a very few occasions, until yesterday none of them particularly recent, when the Seanad as a body has failed to approve Goverment bills or has voted in favour of a Bill with which the government does not agree.”

Broadsheet: “Is this simply a desperate attempt to justify the Seanad’s existence?”

Legal Coffee Drinker:
“You could call it that. You could also call it a message, from the Seanad, that it has the potential to act independently; that it is not the lapdog of the Government and that it is prepared to exercise its powers – one of which, Article 27, was discussed in a previous post – so as to act as a check and balance on the Government when necessary. Perhaps a message communicated rather late in the day, but, some might say, better late than never.”

Broadsheet: “And will the Bill now be passed?”

Legal Coffee Drinker: “Not a bit of it, unless there’s a Dail rebellion. Bills initiated in and passed by the Seanad have to be approved by a majority of the Dail before they can become law. But the approval of the Bill can only add to the pressure on the Government to do something about upwards-only rent review clauses, and weakens the argument that the Seanad, being merely a government lapdog, has no useful role to play as a check and balance. People who – like me – might have considered voting YES tomorrow may perhaps [drains coffee] reconsider in light of the, extremely belated, discovery by the Seanad of its teeth.”

Broadsheet: “Thanks Legal Coffee Drinker.”

Four Labour senators absent as Govt loses Seanad vote on rent reviews (RTE)

(RTE)

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