Upward-only rent review Bill attempts a balancing act

Mon, Mar 31, 2014, 01:00

The passing at the second stage in the Seanad of Senator Feargal Quinn’s Upward-Only (Clauses and Reviews) Bill 2013 puts the issue of retrospectively removing upwards-only rent review clauses in leases entered into prior to February 28th, 2010, firmly back on the table.

Citizens’ property rights are protected by two separate articles under the Constitution.

Article 40.3.2 of the Constitution provides that the State shall vindicate and by its laws protect the property rights of every citizen as best it may “from unjust attack”, and Article 43.1 guarantees that the State will not pass any law attempting to abolish the right of private ownership. However, that right is qualified by the proviso that such rights ought to be regulated by the principles of social justice, and that the State may delimit by law the exercise of the said rights “with a view to reconciling their exercise with the exigencies of the common good”.

It has been reported that the Government is not willing to introduce legislation providing for the retrospective removal of upwards-only clauses in the absence of compensation for any losses suffered by a landlord, as it has been advised that such a provision would be unconstitutional.

It is clear that in order to withstand a constitutional challenge, any provision proposing to retrospectively remove upward-only rent review clauses must not be an unjust attack on the property rights of any citizens; must be proportionate, capable of objective justification and must meet a pressing social objective.

In the case known as ‘Re Article 26 and Part V of the Planning and Development Bill 1994’, the Supreme Court considered provisions which proposed that landowners wishing to develop land were obliged to cede 20 per cent of the land (or the equivalent value thereof) to the local authority.

‘Warrant interference’

In determining whether the statutory provisions constituted an “unjust attack” on property rights, Chief Justice Ronan Keane, stated the Bill contained provisions which “are rationally connected to an objective of sufficient importance to warrant interference with a constitutionally protected right and, given the serious social problems which they are designed to meet, they undoubtedly relate to concerns which, in a free and democratic society, should be regarded as pressing and substantial.

At the same time, the court is satisfied that they impair those rights as little as possible and their effects on those rights are proportionate to the objectives sought to be attained.”

In that case, the legislation provided for compensation for the party ceding their land. However, the absence of compensation does not necessarily amount to an unjust attack on private property. In the Financial Emergency Provisions in the Public Interest Act 2009, payments to service providers of the State were reduced without compensation despite the fact that the rate payable were contained in pre-existing contracts.

‘Unusual economic crisis’

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