Last week the Circuit Court awarded an internationally renowned sculptor €88,000 compensation for having to move his rented studio which he has occupied since 2006 out of a Temple Bar building as the building is due to be demolished under redevelopment plans.

The building is to be demolished and redeveloped in a multi-million euro extension to the existing Parliament Hotel in Dublin 2. The Landlord has obtained planning permission for a 5-7 storey development over basement extension which includes 77 additional hotel bedrooms.

The Tenant, whose lease had in fact expired in April 2016, had been paying a monthly rent of €800 but was now €10,000 in arrears. Despite these flaws, the tenant had acquired tenancy rights and was entitled to a new lease as he had been in continuous occupation for over five years – hence the compensation claim!

Section 16 of The Landlord and Tenant (Amendment) Act 1990 provides that a tenant shall be entitled to a new tenancy, commencing on the termination of the previous one, subject to “business equity” whereby the tenant has continuously occupied the commercial premises for 5 years. If the tenant establishes a new tenancy based on business equity, the tenancy will be fixed at twenty years or such lesser term as the tenant may nominate. This can be disastrous for Landlords (many of which who are new owners) who have redevelopment plans for their investment properties.

Section 47 of the Civil Law (Miscellaneous Provisions) Act 2008 can be of assistance in such scenarios where a Lease has a term longer than 5 years but the Landlord does not wish to grant the tenant a new lease on its expiry. The Acts allows all business tenants to contract out of their entitlement to renew their tenancy after five years. The tenant must renounce their rights to a new tenancy. This is done in writing and on the provision of independent legal advice through a Deed of Renunciation. This document can be executed at any stage during the term of a lease.

A Deed of Renunciation can be a great tool of flexibility and freedom for Landlords (and can save them a lot of money in the long-run!) who may wish to obtain vacant possession at the expiration of the lease due to a change in the property market at the end of the term. Given the fact that the latest crane count in the Dublin skyline is currently at 60 we except to see more of these tenant compensation claims…