As many people are aware, the State has been acting as landlord to individuals and companies alike since 1924. However, it is not widely known that at the end of an existing lease, a tenant can only claim the right to be granted a new lease by the State in very limited circumstances.
Indeed, many an unsuspecting tenant of the State is unaware that only in those limited circumstances where the State does not renew the tenancy, there is compensation for disturbance or for improvements made to a rented premises. The problem goes back to the Landlord and Tenant Act of 1931, which was passed to give greater protection to tenants. It allowed a tenant of a business premises, subject to certain conditions, to call for a new lease at the end of an existing one, or to be compensated for disturbance or improvements.
For many years, it was presumed that these rights also applied to tenants of the State. However, the Landlord and Tenant (Amendment) Act 1980 specifically stated the State is not bound in its capacity as landlord. In addition, a High Court judgment in 1992 held that the provisions of the 1931 Act regarding renewal and compensation rights do not apply against the State. This means that the only time a tenant can claim a new tenancy is when the State acquired the landlord's interest after 1980. Even then, the tenant can only call for one new lease and only when they have the right to call for that lease and the State refuses to grant it, are they entitled to compensation for improvements or disturbance.
Take the case of a tenant who took a lease from the State before the 1980 Act. Believing they had rights under the 1931 Act, the tenant may have spent substantial monies on buildings or improvements in the belief they had a right to call for a new tenancy, or if a new tenancy was refused that they would have a right to be compensated for improvements and/or disturbance - but this is not the case. Or consider the scenario where, without the tenant's knowledge, the State acquired the landlord's interest in the property they rent, and they acted on the same assumption. Tenants have no say in a landlord selling an investment, and in such a case, the 1980 Act allows compensation only for improvements made before the State acquired its interest in the property.
Therefore, tenants of the State would be ill advised to erect any buildings, add on extensions or improve the property because their expenditure is only benefiting the State.
When taking a lease, a tenant should ensure the title of the superior interests are checked because if the State has any interest in the property, the tenant is not entitled to a new lease and the same restrictions apply relating to compensation for disturbance and improvements.
Unless the Dail introduces legislation to oblige the State to compensate for disturbance and improvements, it seems the only option open to a tenant who wishes to challenge the situation would be a constitutional action. Under the Constitution, the State guarantees to protect and vindicate the property rights of all citizens and recognises that the exercise of those rights ought, in civil society, to be regulated by the principles of social justice.
Whatever public policy argument there may be against tying up State lands indefinitely by allowing the right to a new tenancy, there can be no sustainable argument for unjustly enriching the State at the expense of a citizen who, perhaps completely unaware of any State interest, invests in their business, pays rent to the State, provides employment and is then denied rights that they would be allowed to exercise against any other party.
The law should be changed to reflect the fact that the secondary rights of compensation for improvements and disturbance can co-exist with the State's immunity from having to grant new tenancies.
Loraine Hayes is an associate in the commercial property department of William Fry solicitors.
