Legislative Change for Business Tenants in Ireland
Under these new legislative changes to the Landlord and Tenants Act, tenants can now opt out of contracts which auctomatically gives them the right to a new tenancy after five years. As many landlords wanted to avoid this automatic renewal right, tenants we often forced to move premises. Up to now, this "opt out" was only available to the office sector.
The Civil Law (Miscellaneous Provisions) Act 2008 now allows any tenant to contract out of its renewal rights. This enables business tenants generally to opt out of the entitlement that the law gives to a tenant who has held such a lease for at least five years to a renewal of the lease for up to a further 20 years. The ability to opt out in this way is at present available only to office tenants. The effect of the extension will be to ease the situation of business tenants on short (less than five years) leases whose landlords might otherwise have been unwilling to renew a lease for fear of committing themselves for a tenancy longer than they might wish.
All business tenants can now waive landlord and tenant rights, provided they get independent legal advice before the commencement of the tenancy and sign a waiver.
Landlords and tenants will now be able to agree terms that match their business plans and intentions.
In the current market, more and more small firms are reluctant to enter to into long leases, so this new legislation will be of benefit to these parties.
However, as landlords require to make a return on their investment, more and more landlords may now insist on getting waivers for all leases.
The changes to the rules will not affect exisiting tenants as they will not have signed a valid waiver so the rule changes are not retrospective.
It is advisable for both landlords and tenants to investigate these changes in greater depth before agreeing to any lease agreement. This new legislation will go some way to freeing up the commercial rental market.