As campaigns go, you have to admire the chutzpah and clarity of the one illustrated above. The photograph shows a banner unveiled today above Korky’s shoe-shop in Grafton Street in Dublin, a couple of hundred metres from Government buildings. The subject of the banner is one of the most vexed issues in Irish commercial property at present, the imminent introduction of legislation to allow commercial tenants to secure current market rents in leases which presently provide for Upward Only Rent Reviews (UORRs). The property industry is blaming the uncertainty over the new measures for the almost complete elimination of investment transactions at present, tenants are clamouring for the new legislation blaming existing rents, which can be benchmarked with boom-era rents, for threatening their livelihood and that of their employees and neighbourhoods, existing investors are nervous about the financial impact of any changes on the value of their assets and I am willing to bet the government is anything but sure-footed over the cost of the new provisions and the potential for constitutional and other legal challenge.
The latest news on the subject that has been reported, was an article in the Irish Sunday Times in July which claimed to preview the new legislation (the article is not available online without subscription but you can get most of the details in the update at the bottom of this blogpost). There was also a meeting between Minister for Justice and Equality, Alan Shatter and tenant representatives at the start of August, reported in the Sunday Business Post here. The Department of Justice did not offer any comment on the Sunday Times story, but the expectation is that a Bill will be unveiled at the end of September which will set out the proposed legislation. There will be a feature entry on here then.
There have been two extensive entries on the subject of UORRs on here previously (available here and here)
And if you didn’t know already, Ronan Keating of Boyzone fame was a one-time employee at Korky’s shoe-shop
NAMA Wine Lake 
Anticipation is certainly building on the UORR retrospective legislation, no matter what the format you can be sure legal eagles are rubbing their hands together on this. SCSI are estimating it could cost NAMA €6 billion @ discount 20% in their february policy paper.
Here is a great precedent for ‘retrospective’ legislation.
http://thestory.ie/2010/02/07/the-closure-of-one-mans-tax-relief/
thanks to the story.
The country is smouldering. The government will count itself lucky if all it has to face are a few big street banners.
Fine Gael Election manifesto ha ha ha.
This from the same party who said “not another cent”
So what if it costs NAMA €6bn? What is NAMA except debt forgiveness for the people who got us into this mess? €6bn for small business to survive and (according to Morgan Kelly) €6bn for mortgage debt forgiveness for Joe Public. May as well be hung for a sheep as a lamb…
@john gallaher:
That was the legislative closing of a tax loophole. It was not retrospective.
You don’t need a sledgehammer to crack a nut. That there are problems with some retail leases is accepted. However, this should not mean that the law of contract in Ireland is set on its head.
The fact that virtually no investment sales have concluded in Ireland since the Fine Gael party went “populist” with this suggestion, in order to get itself elected, speaks for itself.
@wstt the argument is constantly about retrospective legislation it was for illustrative purposes the original loophole against the wishes of revenue and D of F by Ahern was RETROSPECTIVE
“This tax exemption became a major issue over a decade ago when the Sunday Tribune revealed the measure had benefited businessman Ken Rohan and that it was applied retrospectively for the previous 12 years, effectively neutralising any efforts to pursue Rohan for back taxes.”
‘In the interests of the common good’ our government can override contracts and property law , so the question of retrospective legislation and its merits is irrelevant. The crew who destroyed the economy with their absurd valuations and failure to call the Government’s attention to the property/rent bubble – CBRE, Savills, Lisneys, Sherry Fitz etc. are the same crew who are now trying to discourage the Government taking corrective action to allow the economy to recover by scaremongering.. Remember the tenants are not asking to pay no rent, they want to pay market rent – surely a prerequisite for any efficient economy. There is something pitiful about successful business people having to hang banners and beg for normal property costs. And before anyone brings up the old mantra that these business people signed up for leases with legal/ surveyors advice, people should realise that this clause was imposed on tenants for the last 50 years. This system of extortion was enforced by The Chartered Surveyors, The Law Society and landlords. It was endorsed by the Government who signed them on behalf of its citizens. So you had the state – the best covenant in the country willing to go along with this practice. Throw in an opaque/biased rent review system into the mix and BINGO the country is Bankrupt. So for pitys sake allow business people to function and with baby steps we may move forward.
@M. O’C. … Are you sure you’re not john?
There are more business people out there than tenants of retail shops. And business people are supposed to honour legal contracts. For 80% of the last 50 years market leases have been below rent review levels. I didn’t hear the landlords whinging when the rent levels were to the tenants’ advantage – which as I said was most of the time.
And property developers are supposed to honor their debts …
@John Gallaher: Yes they are. And so is everyone else. Banks, governments, everyone. That’s capitalism. When you can’t – you go bankrupt or make a commercial arrangement to settle your debts with your creditors under the law.
And when you sign a legal contract, you honour it or renegotiate it. You don’t change the law retrospectively and make the country’s legislation a laughing stock in the world’s investment community.
Unless you are a property developer see above and have the minister of finance against the revenue and his own departments wishes and recommendations change the law retrospectively…..
Damian Kibred said it all in an article in The Sunday Times“A very strong PR campaign has been launched to protect the vested
interests of a small coterie of institutional property owners in the
debate over upward-only rent reviews. In tandem,there`s some
bleeding-heart commentary on the impact of the planned reforms on the National Asset Management Agency`s balance sheet. The theory is that Ireland will become a pariah state if it decides to protect its entire rertail economy–including 200,000 jobs–by moving to a more
business-friendly property leasing system.
This campaign to protect the current leasing system is special pleading of the worst kind. It is the sort that enabled the British Liberal
party to ignore the great famine of 1847 so its theories on market
economics might not be disturbed. Its time to get real “
Damian Kibred said it all in an article in The Sunday Times“A very strong PR campaign has been launched to protect the vested
interests of a small coterie of institutional property owners in the
debate over upward-only rent reviews. In tandem,there`s some
bleeding-heart commentary on the impact of the planned reforms on the National Asset Management Agency`s balance sheet. The theory is that Ireland will become a pariah state if it decides to protect its entire rertail economy–including 200,000 jobs–by moving to a more
business-friendly property leasing system.
This campaign to protect the current leasing system is special pleading of the worst kind. It is the sort that enabled the British Liberal party to ignore the great famine of 1847 so its theories on
market economics might not be disturbed. Its time to get real “
John Gallaher, sorry but your point on retroactive legislation has been invalidated since the 1999 section 19 ammendment.
Specifically, it is now the case that, just because a law is invalidated or found to be unconstitutional in Ireland, that does not necessarily mean that everything enacted under that law becomes invalid.
See A. -v- The Governor of Arbour Hill Prison. The above is from Justice Murray, but the ever diligent Justice Hardiman outlines several “precedents” for doing away with retroactivity in Irish law.
You can blame the outrage brigade for this one.
@omf my point was illustrative
New leases with UORRs are already illegal.
What we are talking about is enacting retrospective legislation on the remaining legacy leases that probably have on average 8 -10 years remaining.
Are the Irish taxpayers prepared to pay compensation to the landlord when the government reduces the rents and values of these properties? A lot of that benefit will accrue to multinational tenants who generally have no issue with the lease and contract that they signed.
It is the compensation issue that will be tested in the courts.
Retrospectively changing a law, that will expire due to the effluxion of time does not instill confidence in us as a recipient for inward investment.
Where is the “common good” in the Irish taxpayer subsidising multi national retailers at the expense of their pension pool and the loss of billions to the national balance sheet through the NAMA property holdings, not to mention the cost of compensating the landlords for the loss of value on their investment holdings?
There needs to be a local solution that deals with essential local traders. In France the issue is solved through the planning process, whereby a special planning designation is given to shops that can only be used by local traders (bakers, grocers etc) serving the community. These shops have controlled rents. It is only one solution there are others that can be implemented without overturning our credibility as an investment destination – which is hanging by a thread at present.
It could be solved in one swoop by declaring personal guarantees in relation to leases null, void and uncollectable.
@WSTT, despite leaning towards support of the abolition of upward only rent review terms, the fact that government seemingly ruled out universal debt forgiveness this week to residential mortgage holders – I say “ruled out” following Minister Hayes’s and Gimore’s comments though Minister Penrose appeared more open – might be seized upon by some as a principle that there shouldn’t be universal “contract forgiveness” for commerical tenants. The Department of Justice appears to be keeping tight-lipped about the proposed legislation, which has been kicked around for the past three months, so we don’t really know what the Bill in September/October will contain, but I wonder can the government adopt one principle for struggling homeowners and another for a mixture of struggling and not struggling commercial tenants?
If leases had followed the CPI as UORR were intended, we wouldn’t be having this discussion.
It is shocking that supposedly sane adults can debate the rights of a certain group of investors to have a guaranteed income – even as businesses and lives collapse around them.
Have the vested interests in this country no shame at all?
@nwl – perhaps you do not fully understand the issue. There are no comparables between debt forgiveness for mortgages and allowing market rents for tenants. In simple terms it would be like saying that a person who took out a mortgage for say £100,000 in 2000 would, following a review by chartered surveyor be deemed to owe €200,000 in 2005. The Korkys owner is on record as stating that his landlord increased the rent from £140.000 per year in 1995 to €445.000 per year in 2005. This is typical of what was going on high streets all over Ireland.
@CMcC, would disagree with you in the sense that blanket debt forgiveness, for example given to all those in negative equity regardless of whether or not they are able to repay their mortgage, is in my mind at least similar to removing the UORR terms in all commercial agreements regardless of whether or not the tenant is able to pay the rent. Having said that, commercial tenants paying uncompetitive rents will remain an issue regardless of tenant ability to pay because the commercial tenant passes the rent onto their customers, which appears to me to be a distortion in the economy. These are not easy issues at all.
This maybe irrelevant to you all but Boyzone’s Ronan Keating didn’t work in the Grafton Street Korky’s branch he worked in Korky’s in Henry Street!!! Unimportant in the scheme of things but nevertheless you are incorrect!