Irish Commercial Property: Four Provisions to Get Right

Four provisions account for most of what goes wrong on Irish commercial property files. None of them is obscure. All four are regularly misdescribed in secondary commentary, and the first is misdescribed so consistently that getting it right is itself a mark of competence.

1. Section 132 does not make upward-only rent reviews void

Section 132 of the Land and Conveyancing Law Reform Act 2009 is a construction provision, not a nullity provision. It does not strike out an upward-only rent review clause. It reads the clause as permitting the new rent to be fixed at an amount which "may be fixed at an amount which is less than, greater than or the same as" the previous rent.

The clause survives. Its effect changes. That distinction matters when you are advising on a drafting point, because the remedy is not severance.

Section 132(1) applies the provision to a lease of land used wholly or partly for carrying on a business. Section 132(4) applies it notwithstanding any contrary term, but only to the part of the land where the lease permits a business to be carried on. And section 132(2) excludes leases — and agreements for leases — entered into before commencement.

Commencement is the point that decides files. S.I. No. 471 of 2009 appointed 28 February 2010 as the day on which section 132 came into operation. A commercial lease entered into before 28 February 2010 keeps its enforceable upward-only review. Given typical 25- and 35-year terms, a substantial stock of such leases is still running, and a practitioner who assumes the two-way reading applies universally will advise a landlord to accept a reduction it is not obliged to accept.

2. Renunciations and the independent legal advice requirement

The right to a new tenancy under the Landlord and Tenant (Amendment) Act 1980 is triggered by five years' continuous occupation. Section 13(1)(a), as amended, requires that the tenement was, during the whole of that period ending at that time, "continuously in the occupation of the person who was the tenant immediately before that time", and that it be bona fide used wholly or partly for the purpose of carrying on a business. The five-year period was substituted by section 3(1) of the Landlord and Tenant (Amendment) Act 1994, commenced 10 August 1994, subject to a transitional provision.

Renunciation is governed by section 17(1)(a)(iiia), as substituted in 2008. Where section 13(1)(a) applies, the tenant must have "renounced in writing, whether for or without valuable consideration, and has received independent legal advice in relation to the renunciation".

Section 47 of the Civil Law (Miscellaneous Provisions) Act 2008, in effect from 20 July 2008, changed the timing. The Law Society of Ireland's practice note on the subject records that "Section 47 now permits renunciations to be entered into both before and during the course of a tenancy" — before 2008, a renunciation could only be made before the tenancy began.

The practice note flags a set of traps that generate claims:

• The tenant waives section 16 compensation on quitting but not section 46 compensation for improvements
• An assignee is bound even without notice, so the lease should recite the renunciation
• Where the renunciation is signed after the lease, it should be physically annexed to the lease with a copy to the counterpart
• Sub-tenants should give a similar renunciation
• Consideration given after the lease should be recited
• A purchaser of a leasehold interest should search the Registry of Deeds and raise a requisition on title about any renunciation

The note recommends that the independent solicitor witness the tenant's signature. That is the cheapest available piece of evidence that the independent advice requirement was met, and its absence is what makes a renunciation arguable years later.

3. Commercial rates: two criminal offences on a conveyancing file

The Local Government Rates and Other Matters Act 2019, as amended by the Historic and Archaeological Heritage and Miscellaneous Provisions Act 2023, commenced sections 1 to 22, section 27 and the Schedule. Section 12, dealing with interest, was excluded from the general commencement. Section 13 governs payment of rates before a sale.

The Law Society of Ireland's Conveyancing Committee practice note of 21 March 2024 sets out what practitioners need to act on:

• Notification to the local authority within ten working days of a change in the rates database particulars or in the liable person
• Failing to notify without reasonable excuse is a criminal offence
• Failing to pay rates owed before completion of a sale is also a criminal offence
• Unpaid rates and interest owed by an "owner" are a charge on the property, which ceases on a sale where the owner changes
• Interest accrues at 0.0219% per day, approximately 8% per year

The practical steps the Committee recommends are worth adopting verbatim as a file checklist. Ensure the outgoing liable person pays rates owed up to completion before completion, rather than out of the sale proceeds. Allow for the ten-working-day wait for a rates statement when setting a completion date. Continue making the enquiries required under section 32 of the Local Government Reform Act 2014, since those penalties may still apply. And note that the Committee does not recommend using the local authority forms — use your own or the client's.

The sequencing point is the one that catches people. Paying rates out of the proceeds at completion is the ordinary instinct and it does not discharge the obligation, because the obligation is to have paid before completion.

4. Stamp duty, and the 35-year cliff

The Stamp Duty rate on a transfer of non-residential property, other than policies of insurance, is 7.5%, applying to instruments executed on or after 9 October 2019.

Leases are charged on the average annual rent, and the rate steps sharply with term:

• Not exceeding 35 years, or indefinite: 1%
• Exceeding 35 years but not exceeding 100 years: 6%
• More than 100 years: 12%
• Premium on non-residential property: 7.5%

The jump from 1% to 6% between a 35-year and a 36-year term is a drafting decision with a tax consequence, and it is worth raising at heads of terms rather than at engrossment. Revenue also notes that where a lease containing a rent review clause is exempt from Stamp Duty, the rent review clause is also exempt.

Where this sits in the CPD cycle

There is no commercial-property-specific CPD requirement in Ireland. The Law Society's scheme requires 25 hours per cycle, with minimums for professional development and solicitor wellbeing and for client care and professional standards, and the only property-specific reference is that conveyancing-only solicitors employed by a non-solicitor fall under the same regulations. Our guide to solicitor CPD requirements in Ireland sets out the category breakdown and the group study and eLearning caps.

Practitioners acting on both sides of the Irish Sea should be alert to how different the two security-of-tenure regimes are in structure. In England and Wales the exclusion is contractual and procedural, turning on a notice and a declaration; see our guide to contracting out of 1954 Act security of tenure. In Ireland it turns on five years' occupation and a renunciation supported by independent legal advice. The failure modes are not transferable.