Similar to UK Practice
A lease is essentially contractual in nature and most terms as are desired may be provided subject to some constraints arising from statute. Leases of commercial premises, with some modifications, are broadly similar to those found in England and Wales and Northern Ireland.
Landlord and tenant legislation differs slightly between the jurisdictions but is broadly similar. The terms and conditions usually found in commercial and shorter term leases are very similar. UK templates and precedents are very commonly used.
Agreeing the Lease
As in the United Kingdom, there is usually an initial non-binding heads of agreement with the broad commercial terms such as rent, duration, service charges, repairing obligations et cetera, which are agreed in principle by the property agents or surveyors. There then follows a detailed negotiation on the terms of the lease by between the landlord and tenant solicitor. The lease does not become binding until formally executed at the end of the process which usually coincides with the taking of possession and payment the first rent and perhaps a deposit.
Businesses commonly take short-term lettings in their early stages pending making a long-term decision on their needs and/or the financial viability of the business. The commercial terms are almost entirely a matter for agreement.The terms and conditions depend broadly on supply and demand in the market.
There are no rent restrictions in the private commercial sector. A premium is sometimes agreed, but more commonly, the rent is he open market value. There may be a provision for rent discounts with or without specifically fixed increases in the levels of rent during the first number of years, by way of an incentive.
Where the lease is for a period of more than five years, there may be a rent review to market value. In principle, there may be rent reviews after shorter periods such as three years, but this is unusual.
Commonly a business might take a 1 to 3-year lease term at a fixed rent. In such a lease, the landlord may retain responsibility for repairs and longer-term costs. If the building is part of a larger building or there are common facilities, provision will usually be required for a service charge contribution in order to fund the management of the common areas on an ongoing basis.
Businesses may enter a long term lease for a period for example of 5,10, 15 20 or more years. There will typically be a rent review, most commonly every five years. The terms of the rent review and the clauses are almost identical to those found in England and Wales and Northern Ireland practice. Generally, the rent is fixed for a five-year period
2009 legislation prohibited upward only rent reviews for new leases after that date. If there is provision for a rent review at all, it must cut both ways and not just upwards only, as had been the earlier practice, in common with UK practice.
Term and Renewal
Where a lease or tenancy of a commercial property has continued for more than five years, the tenant has the right to a new lease at market rent. generally with five yearly rent reviews for further terms of between 5 and 25 years, largely at the tenant’s option.
The right to a new lease is similar to that in England and Wales and Northern Ireland. As in England and Wales, this right can be waived with informed consent following a relatively simple procedure, which requires the tenant to have independent legal advice on the matter.
Leases contain much the same clauses in Ireland as an England and Wales and Northern Ireland. The tenant is invariably restricted from assigning(transferring) subletting or changing the use of the premises without the landlord’s prior consent in writing. In the same way, there are statutory provisions which require that the landlord cannot unreasonably withhold consent. Accordingly, the landlord may, for example, object to assignment to a proposed new tenant, who does not have the financial capacity to meet the lease obligations.
When the lease is assigned with the landlord’s written consent, the outgoing/ assigning tenant is discharged from future lease obligations and the incoming assignee/ tenant assumes responsibility in its place. The landlord may not charge a premium for its consent. The tenant may sell his interest under the lease subject to the landlord’s consent for a premium if this accords with the position in the open market
Most of the other terms and conditions of leases are very similar to those in the United Kingdom and are underpinned by very similar legislation. Most lease clauses seek to protect the landlord’s interests. They can be negotiated, subject to market forces.
Breach of Lease
The consequences of the breach of a lease are very similar in Ireland and the United Kingdom. The lease itself usually provides that failure to pay rent or any breach of covenant (following notice and an opportunity to remedy) can be a basis for the landlord terminating the lease. Alternatively, the landlord may sue for rent or take steps by injunction or damages for compensation for the breach.
Theoretically, the landlord can peaceably retake the premises if there is a breach of the lease. More commonly a court order for possession and arrears of rent and other breach is usually sought by legal process.
The sanctions for non-payment of rent include an action for possession to actions for debt. The pre-court court procedures are very similar reflecting the common legal systems and systems of law.