Occupiers of shops or businesses affected by ground rent will be relieved at yesterday's ruling, writes Carol Coulter, Legal Affairs.Correspondent
The scheme that provides for tenants to buy out their landlords' interest in the land on which their property is built according to a certain formula originated in the State's desire to allow people own houses and other property.
It means that cases where an often distant landlord, who owned the land then sold the lease, allowing someone else to build on it, was entitled to continuing ground rent, could be ended as such leases expired.
The constitutionality of this scheme, contained in Section 7 of the 1984 Landlord and Tenant Act, was challenged by a firm that owns ground rent on about 25 business premises on the main street of Carrickmacross.
The case concerned the foreign-registered JES Holdings Ltd, and its shareholders, John and Lucy Shirley. One of their lessees, Augustine O'Gorman, has a supermarket on the premises and sought to buy out the ground rent. The landlord challenged the move in the Circuit Court, then in the High Court.
This court ruled last May that Mr O'Gorman was entitled to buy out the ground rent for €30,000, but no order was drawn up until the Act's constitutionality was decided. Yesterday Mr Justice Peart found it constitutional.
Most owners of dwellings affected by ground rent have bought it out by now, but it still affects many commercial buildings. The rise in land value has made this a potentially burning issue, as in some cases land is more valuable than the buildings on it, especially if they are derelict.
If there are questions about the ultimate owner of ground rent, or if building owners fear they will be unable to buy out the rent and face rises at the expiry of their leases, it could hold up urban renewal.
Evidence given by Shane O'Hanlon graphically illustrated this. The auctioneer in Carrickmacross and a former Fianna Fáil councillor, on behalf of Mr O'Gorman, said occupiers of shops or business premises on the west side of Carrickmacross main street, owned by the plaintiffs, were less inclined to modernise premises than those who occupied freehold premises on the street's east side.
"He says that this is because of uncertainty resulting from their holding only leasehold interest, and has resulted in business closures, relocations and so forth on that side," the judge said in his judgment.