Claiming New Lease

Procedure

In order to claim a new lease, a notice must be served within certain time limits by the tenant.  Where a lease ends by the expiry of its term (agreed period), notice must be served before termination or within three months of the landlord serving notice of termination.  Within that time limit, the tenant may serve a notice claiming a new tenancy in a prescribed format.  If the terms cannot be agreed, an Application may be made to the Court, which will set the terms of the lease in default of agreement.

If the tenant does not claim relief the landlord can serve notice of termination of the tenancy.  This cannot be done earlier than three months before the end of the tenancy.  Once this is done, the tenant has three months to serve notice.

Frequently, the landlord serves a notice to quit in order to terminate a  tenancy or seeks possession at the end of the lease term. The tenant may serve a notice to claim relief. The landlord may initiate court proceedings for possession and the tenant makes an application to Court for a new tenancy.  Both sets of proceedings are united in a single court proceeding and a new lease is agreed or determined by the court

The Court has the discretion to extend the above time limits where the failure to observe the time limits is due to a disability, mistake or absence from the State or where injustice would be caused.

A person who serves notice to seek relief may apply to Court within a period not less than one month thereafter to determine the terms of the new tenancy.  If the tenant does not apply the landlord may do so.

Where an application is pending for a new tenancy or to fix the terms of a new tenancy and the pre-existing tenancy was terminated otherwise than by ejectment or surrender the tenant may, if he so desires, continue in occupation of the tenement from the termination of the tenancy until the application is determined by the Court or, in the event of an appeal, by the final appellate court, and the tenant shall while so continuing, be subject to the terms (including the payment of rent) of such tenancy, but without prejudice to such recoupments and readjustments as may be necessary in the event of a new tenancy being granted to commence from such termination.

Terms of New Lease

Originally, the tenant’s entitlement was to a lease for 35 years or such shorter period as the tenant might nominate.  In the case of rights based on business use, the tenant’s right is for a lease of a term of between 5 and 25 years as the tenant may nominate.  A shorter term may be nominated with landlord’s consent.

The Court shall fix the terms of the new tenancy and make an order requiring the landlord, and any superior landlord whose joinder may be necessary, to grant or join in the grant of, and the tenant to accept, a new tenancy accordingly.) Such person or persons shall grant or join in the grant of, and the tenant shall accept, a new contract of tenancy in writing in respect of the tenement on the terms specified in the order, commencing on the termination of the previous tenancy.

The tenant shall not be entitled to compensation in respect of the termination of his previous tenancy.  If any dispute, failure or question arises or occurs in the carrying out of the order, the Court may, on the application of any person concerned, make such order as justice may require.

The “gross rent” and other terms of the lease are fixed by Court.  The gross rent is that which would be agreed by a willing lessor and willing lessee on the basis of vacant possession and on the basis of similar rents and letting values for a building of similar character and situate in a comparable area, disregarding goodwill.

The rent payable by the tenant under the new tenancy shall not be less than (as the case may require) the rent payable by the landlord in respect of the tenement or such proportion of the rent payable by the landlord in respect of the tenement and other property as is in the opinion of the Court fairly apportionable to the tenement.

The rent shall be the gross rent reduced, where appropriate, by any allowance for improvements. The gross rent shall be the rent which in the opinion of the Court a willing lessee not already in occupation would give and a willing lessor would take for the tenement, in each case on the basis of vacant possession being given, and having regard to the other terms of the tenancy and to the letting values of tenements of a similar character to the tenement and situate in a comparable area but without regard to any goodwill which may exist in respect of the tenement.

The allowance for improvements shall be such proportion of the gross rent as is, in the opinion of the Court, attributable to improvements made by the tenant or his predecessors in title and in respect of which the tenant would have been entitled to compensation for improvements if the Act did not apply to the tenement or the new tenancy had not been created.

The Court may, as one of the terms of the new tenancy, require the intended tenant to expend, within such time as the Court thinks proper, a specified sum of money in the execution of specified repairs (including painting for purposes of preservation but not painting for purposes of mere decoration) to the tenement and authorise the postponement of the grant of the new tenancy until the requirement has been complied with.

If the intended tenant refuses or fails to comply with a requirement the Court shall have the power to declare him to have forfeited his right to a new tenancy and to discharge any order granting it to him.

The new tenancy shall be subject to such covenants as may be agreed upon between the parties or, in default of agreement, as may be determined by the Court.

Review of rent

The Court cannot fix a rent review clause. Instead, either party can apply to Court for rent review at five yearly intervals.  A notice must first be given to the other party.  In default of agreement, the party seeking review may apply to Court.  In practice, the vast majority of leases, rents and rent review are agreed outside of Court, in the context of the court’s powers.

Where the terms of a new tenancy are fixed by the Court, the landlord or the tenant shall be entitled to have the rent reviewed in accordance with this section.  The person seeking the review shall serve on the other party notice of his intention to have the rent reviewed.

The notice may be served

• where the rent has not previously been reviewed—not earlier than one month before the fifth anniversary of the date on which the terms of the tenancy were fixed,
• where the rent has previously been reviewed—not earlier than the fifth anniversary of the date of service of the notice for the preceding review.

In default of agreement on the rent, the person seeking the review shall be entitled to apply to the Court to have the rent reviewed not earlier than one month after service of the notice. In default of agreement, the rent fixed upon the review shall become payable on whichever of the following dates is the later—

• the first gale (rent) day after service of the notice
•  where the rent has not previously been reviewed, the first gale day following the fifth anniversary of the date on which the terms of the tenancy were fixed,
• where the rent has previously been reviewed, the first gale day following the fifth anniversary of the date of service of the notice for the preceding review.

Lease in Lieu of Compensation

Where the tenant serves on the landlord a notice of intention to claim compensation under  for improvements, the landlord, any superior landlord or any two or more of such persons may, within two months, serve on the tenant a notice in the prescribed form offering him a new tenancy in the tenement on terms specified in the notice or on terms to be fixed by the Court.

Where a notice is served offering the tenant a new tenancy on terms specified in the notice—

• the tenant may, within one month, serve on the person or persons who served the notice a notice in the prescribed form accepting the new tenancy;
• in that case, such person or persons shall forthwith grant, and the tenant shall forthwith accept, a new contract of tenancy in writing in respect of the tenement on the terms specified in the notice served on the tenant, commencing on the termination of the previous tenancy;

The tenant may, alternatively, within one month serve on such person or persons a notice refusing the new tenancy; In that case, the tenant may proceed with his application for relief by way of compensation for improvements, but—

• on the hearing of the application, the Court if satisfied that the tenant is entitled to that relief, may in lieu of awarding that relief make an order requiring the necessary person or persons to grant, and the tenant to accept, a new tenancy in the tenement on such terms as the Court (subject to the provisions of this Act) thinks proper and specifies in the order, and
• (ii) upon the making of that order, the necessary person or persons shall forthwith grant, and the tenant shall forthwith accept, a contract of tenancy in writing in respect of the tenement on the terms specified in the order.

Where a notice is served offering a new tenancy on terms to be fixed by the Court—

• either the person or persons who served the notice or the tenant may apply to the Court for an order fixing the terms of the new tenancy;
• upon the making of that order, the necessary person or persons shall forthwith grant, and the tenant shall forthwith accept, a contract of tenancy in writing in respect of the tenement on the terms specified in the order.