The Grumpy Old Man

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What, If Anything, Are the Government Doing About These Unfair Contract Terms?

Some contract terms are forced upon elements of society, who are presented with a very much, take it or leave it attitude, so, where is the Government's manifeso promised action?

By gum, they don't have some weird contractual arrangements over here in Ireland. What I write about now is clearly against the public interest, which is why I ask "what if anything is the government doing about it?"

I became aware of this particular contractual oddity after Mrs Grumpy and I became friendly with the proprietor of a small shop in our local town. She was saying that, although home ownership was very high in Ireland, a huge proportion of commercial property was leasehold. She was discussing the fact that the rent review under her lease agreement was shortly due. Commenting that, like the majority of commercial lease agreements in Ireland, the clause detailing the review timescales always referred to it as "an upward rent review". It appeared that when one took on the lease, this particular clause was not negotiable. If the potential tenant disagreed with it then the lease agreement never went through.

This sort of arrangement may be all well and good when the economy is booming and economic growth is feeding through to small commercial enterprises. I suppose the majority of proprietors who had one of these rent reviews during the economic boom just accepted it and got on with running his business. However, in an economic downturn, business must watch their overheads like a hawk, as the profit in any business is dependent upon keeping them to the barest minimum.

After the financial downturn in 2008 this "upward only" rent review became quite a source of public debate. Particularly so, as it is clearly not in the general interest of the proprietor and ergo nor the public as any costs associated with this increase will feed through to the final selling price of goods.

We have seen the effect of this on a number of commercial enterprises in our town that have closed down. In a different example, a small Haberdashers was ticking over quite happily. Their rent review came up and the new proposed rent, we were told, was outrageous. As a result of this they moved to much smaller premises. These premises were tucked away in a backstreet, where the business suffered. I now note that they have moved yet again, and are now even more hard to find being on the first floor above a computer shop!

A similar situation, arose in our local village when a shop that had been there ever since we moved to the area suddenly had a closing down sale. A couple of weeks later they did reopen but again in much smaller premises tucked away from their previous prime location.

In each of these examples we can see that not only did the business proprietor suffer, but so did the end-user, the buying public, me and thee. But then the public and the proprietor were not the only ones to suffer. It's hardly rocket science to see that in a number of cases, the premises stood empty following a rent review, earning the landlord nothing (I recall one such shop that has now been empty for the best part of seven or eight years). Call me naive, but I would have thought it better for the landlord to have a tenant in the shop paying something than have it standing empty. Or, what would have been wrong with a rent increase of one cent, then honour and the legal requirements of the lease would have been satisfied? I do sometimes wonder just what some of these people have between their ears. It doesn't seem to be a fully working brain!

As luck would have it, at the time of the public debate referred to above, there was a national general election in the offing. This "upward only rent review" became a matter aired at the hustings and the party eventually forming the next government had within their election manifesto the promise of the abolition of such clauses. This was proposed on the basis that the arrangements were "not in the public interest".

Nothing much was heard about this election promise for the first months of the Parliament. The next thing to be heard was that the government had been advised that to ban such contractual clauses could create legal problems. One can understand this with existing leasehold agreements but why in the world such arrangements could not be banned from new agreements escapes me.

To say that there would be legal problems with such a ban I find absolutely astounding. Gordon Bennett, action needs to be taken by Parliament (the national legislature) whose job it is to run the country by putting in place the appropriate legal framework, i.e. the law of the land. If they have been advised that there is a legal problem with one of their proposed measures they, surely, are the ones in a position to change that legal framework, thus allowing the implementation of the policies for which they were elected? How else in the world can it work?

I can only assume that somewhere down the line vested interests have put pressure on members of Parliament for them to find some excuse for not passing this legislation. But then the activities of these vested interests (some people with their head in the sand call them "lobby groups") are not restricted to the Republic of Ireland. Perhaps one of the most appalling examples of this is the "gun lobby" in the United states. But enough of that here, I propose to dedicate a future grump to just that problem.

But what can we do about this? The problem is, the end result is not something directly visible to Joe public. All that we can do is to make our thoughts known to our local parliamentary representatives and try to get the matter back on the table for the next general election which should be next year. It really is in everyone's interests to get this idiocy resolved in a sensible fashion.

The current status quo really is crazy.