Page 3242 - Week 11 - Wednesday, 21 September 1994
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
to withhold consent on certain grounds if the owner can show that this is reasonable. In my opinion, this provides adequate protection for the owner. The right to sublet and mortgage a lease is an important tool in the management of a tenant's business.
Owners have made representations about compensation under demolition clauses. A demolition clause is a clause in a lease that allows an owner to terminate the lease early for the purposes of demolishing the building. An owner may wish to demolish a building for a number of reasons, including redevelopment. Under the draft code released in June, reasonable compensation would have been payable for any loss suffered by the tenant as a result of the early termination of a lease under the demolition clause. This has been strongly opposed by BOMA. Their concern is that a lease that contains a demolition clause will, by its very nature, diminish the rent that can be charged for those premises. They suggest that the owner will have to give a rental concession if the owner wants a tenant to agree to the existence of a demolition clause in the lease. Obviously, if a tenant has been able to obtain some concession such as reduced rent because of the existence of a demolition clause in the lease, then it would be double dipping to allow the tenant to obtain additional compensation.
The proposed code, therefore, now provides that, in calculating compensation, the tribunal will have regard to any concessions given to the tenant, such as reduced rent, because of the existence in the lease of a demolition clause. This will mean that, if the owner can show that the tenant has in fact already received some concession, such a concession should lead to a reduction in the amount of compensation payable. This qualification that the tribunal should take account of any concessions given to the tenant in determining compensation has also been extended to the clauses in the code dealing with compensation for relocation and compensation for disturbance.
Changes to the draft code released for public discussion have been made in relation to damaged premises. It has been pointed out that tenants should obtain insurance to cover any loss arising from damage to premises and the owner should not, therefore, have to compensate the tenant where premises are damaged and are not useable. This seems a fair point as the damage to the premises occurs through no fault of the owner. Accordingly, under the proposed code, no compensation will be payable as a result of an early termination because of damaged premises. Tenants should seek insurance to cover any losses in these circumstances. However, where the owner does not intend to rebuild the building or fails to give notice of an intention not to rebuild, the tenant will be able to claim compensation for any loss or damage suffered as a result of the owner's failure to rebuild the premises or to give the requisite notice.
I look forward to hearing members' views on the proposed code during the course of the debate on the Commercial and Tenancy Tribunal Bill. These views will be carefully considered by the Government in formulating the final version of the code, which I anticipate presenting to the Assembly within a fairly short time after passage and commencement of the Bill. That will then provide an opportunity for Opposition members of the Assembly, under the power to move amendments to regulations, to move and debate amendments to the code. But we want to be very up front and show you what we think the final version looks like before the Bill is debated.
Question resolved in the affirmative.
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .