Decarbonisation of Buildings
Energy Performance of Buildings Directive Adopted by EU Council
The Recast Energy Performance of Buildings Directive has been adopted by the Council and will be published in the Official Journal of the European Union shortly. It will enter into force 20 days later. Member states will have two years to incorporate the provisions of the Directive into their national legislation, subject to some exceptions.
The Directive is the culmination of years of work by the EU to provide a legal framework for the reduction of greenhouse gas emissions from buildings and improving their energy performance to achieve a zero-emission building stock by 2050. The Directive will have significant implications for developers, investors, landlords and tenants, who now have a clearer line of sight of the obligations to be transposed into Irish law, and who will need to factor these obligations into investment strategies and leases.
Our Q&A briefing on the Directive sets out the background and key obligations as well as answering questions in relation to the technical requirements of the Directive.
Commercial Leasing
UK BBP Updated Green Lease and Acquisitions Sustainability Toolkits
The UK Better Buildings Partnership (BBP) has updated its Green Lease and Acquisitions Sustainability Toolkits.
The Green Lease Toolkit contains legal clauses in nearly 20 key areas, covering topics such as building management, circular economy, waste and renewable energy. It offers suggested drafting variations categorised as "light", "medium" or "dark", accommodating users at various stages of their green leasing journey.
The BBP has also launched an enhanced Acquisitions Sustainability Toolkit, designed to support commercial property owners in assessing the sustainability characteristics of buildings during the acquisition phase. The refreshed toolkit provides a detailed sustainability checklist for assessing buildings during due diligence, covering topics including net zero carbon, climate resilience, environmental regulation, and biodiversity.
Whilst the BBP materials have been prepared for the UK real estate market where the MEES Regulations (which require minimum energy performance requirements to be met before buildings can be sold or let) have been in operation for some time, many of the areas covered are also applicable to the Irish real estate market.
The Irish green lease clauses drafted by the Chancery Lane Project Irish Property Working Group (led by Arthur Cox LLP) are available here.
Commercial Rates
Commercial Rates Guidance Delayed
Government guidance on the new commercial rates regime, which has been in place since 1 January 2024, has been delayed.
The Department of Housing initially indicated that it intended to engage legal counsel to prepare guidance documents for stakeholders before the end of Q1 2024. However, we understand that the guidance is delayed as the Department is working on regulations under Section 9 (Provision for abatement of rates in respect of vacant properties*) and Section 15 (Scheme for waiver of rates) of the Local Government Rates and Other Matters Act 2019.
*Vacancy rates refunds vary from one rating authority to another. For example, in 2024, vacant properties in Dublin City Council will not be entitled to a percentage reduction from the vacancy refund scheme and therefore are liable for the full commercial rates charge on the premises. Vacant properties in South Dublin County Council will be entitled to a 25% reduction. Vacant properties in Cork City Council will be entitled to a 50% reduction.
Our summary of the new commercial rates rules is here.
PRS, Student Accommodation and Housing
Legislation Confining Student-Specific Accommodation Leases to the Academic Year
The Government recently announced its intention to legislate against requiring students to sign up to tenancies/licences for longer than the academic term.
The draft Bill has not yet been published but there is clear Government support to progress legislative changes to ensure student-specific accommodation leases are confined to the academic year. Simon Harris TD, in his then role as Minister for Further and Higher Education, also confirmed in response to a Dáil question that he would be contacting local authorities to ask them to assess whether providers are operating in compliance with specific planning conditions for the developments.
The Government's Q1 2024 Housing for All Update notes that "work is also ongoing on legislative changes to ensure student-specific accommodation leases are confined to the academic year".
Real Estate Finance
The Supreme Court and e-Conveyancing – Good News for Banks
A recent Supreme Court judgment contains bad news for local authorities and good news for banks.
The Supreme Court has affirmed the High Court decision in Michelle Maher v Dublin City Council1 that a statutory charge created by the Derelict Sites Act 1990 can be overreached by a prior mortgagee exercising a statutory power of sale.
Our briefing explains why using the conveyancing process to assist in tax collection does not advance the cause of making the conveyancing process more efficient or transparent.
Real Estate Development
Planning and Development Bill
The Planning and Development Bill has completed Committee Stage in the Oireachtas. It will now move to Report Stage where amendments arising out of Committee Stage are considered.
The Bill aims to enhance clarity, improve consistency, and increase confidence in the Irish planning system. Some core changes include:
- the introduction of statutory timelines for decision-making;
- new long-term strategic development plans which will last for 10 years;
- reform of planning judicial review, including the removal of the leave application process, the introduction of statutory judicial review timelines and a revised legal costs system, which includes a legal costs scheme;
- empowering the courts to order decision makers to correct errors in permissions instead of quashing them; and
- new provisions for Urban Development Zones to facilitate strategic development and regeneration initiatives in designated areas.
Amended Building Regulations
Two new sets of Building Regulations have been made, relating to fire safety and the protection of workers from health risks.
S.I. No. 108/2024 - Building Regulations (Part B Amendment) Regulations 2024: These regulations amend the Building Regulations 1997 by updating fire safety requirements for buildings other than dwelling houses, add definitions for building types and amend the list of building uses where a material change is deemed to take place.
S.I. No. 122/2024 - Safety, Health and Welfare at Work (Carcinogens, Mutagens and Reprotoxic Substances) Regulations 2024: These regulations have been made to give effect to Directive (EU) 2022/431 on the protection of workers from the risks related to exposure to carcinogens or mutagens at work. They apply where carcinogens, mutagens or reprotoxic substances are present or may be present at the workplace.
Government Summer 2024 Legislation Programme
Real Estate-Related Legislation
The Government has published the Summer 2024 Legislation Programme which includes two property-related Bills for priority publication in this session. We will provide further updates as each Bill progresses through the legislative process.
Real estate-related legislation for priority publication
Land Value Sharing Bill: This legislation will permit the State to secure a proportion of the uplift in land values resulting from zoning and designation to facilitate provision of infrastructure. The pre-legislative scrutiny (PLS) report was published in September 2023. The Government's latest Housing for All update notes the delay in the publication of the Bill from Q1 2024 to Q2.
Residential Tenancies (Right to Purchase) Bill: This legislation will give tenants in rental properties a first right of refusal to purchase a property when it is put forward for sale. The Government's latest Housing for All update notes the delay in the publication of the Bill from Q1 2024 to Q2, stating that the Government is considering the current draft Bill and the pre-legislative screening report published in December 2023 which made several recommendations in relation to the proposed legislation.
Real estate-related legislation for priority drafting
Registration of Short-Term Tourism Letting Bill: This will provide for new regulatory controls requiring short-term and holiday lets to register with Fáilte Ireland with a view to ensuring that houses are used to best effect in areas of housing need. Heads of Bill were approved in December 2022 and work on the Bill is ongoing. The Government has previously stated that it is aiming to have the register in place by Q2 2024. The latest Q1 2024 'Housing for All' Update states that the Government will "soon publish legislation on Short Term Lets following approval of Ireland's approach by the European Commission".
Housing (Miscellaneous Provision) Bill: This includes Miscellaneous amendments and additions to the Housing Acts in respect of social housing, regulation of Approved Housing Bodies and amendments to the Building Control Acts. Heads of Bill were approved in January 2024.
Remediation of Defects in Apartments and Duplexes Bill: This will establish a remediation scheme for apartments and duplexes with fire safety, structural safety, and water ingress defects, constructed between 1991 and 2013. Heads are currently in preparation.
Heat Bill: This will establish a regulatory model for district heating that ensures consumer protection and the delivery of a vibrant district heating industry. It will mandate all public sector buildings and facilities to connect to district heating where it is available and technically, and economically feasible. Heads are currently in preparation.
Other real estate-related legislation in the programme
Fire Services Bill: This will consolidate and update the Fire Services Act. Work on the Bill is ongoing.
Industrial Development (Miscellaneous Provisions) Bill: This will equip IDA Ireland with the legislative powers required to establish a body corporate with a third party for the specific purpose of developing or procuring new industrial or commercial buildings or infrastructure. The Bill also deals with grants to IDA companies. Revised heads are currently in preparation.
The partnership, co-operative and insolvency legislation listed below is also included in the programme.
Miscellaneous Provisions (Transparency and Limited Partnerships and Businesses Names) Bill 2023: This will reform the Limited Partnership Act 1907 and the Registration of Business Names Act 1963, strengthening Ireland's regulatory framework and responding to concerns raised in relation to the transparency of Limited Partnerships. Heads are currently in preparation.
Co-operative Societies Bill: This will place the co-operative model on a more favourable and clearer legal basis, thereby creating a level playing field with companies and encouraging the consideration of the co-operative model as an attractive formation option for entrepreneurs. PLS was completed in May 2023.
Personal Insolvency (Amendment) (No.2) Bill: This will update aspects of personal insolvency legislation, following a statutory review of the Personal Insolvency Acts. Work on the Bill is underway.
Cases Round Up
Irish Cases
Enforcement of Restrictive Covenant in Retail Lease – the 'Price' of Doing Business
Retail landlord and tenants, particularly those occupying shopping centres and retail parks, will be interested in the outcome of Dunnes Stores Unlimited Company & Anor v Dafora Unlimited & Ors 2 where the defendant was unsuccessful in its appeal against the High Court's decision to enforce a restrictive covenant in a lease preventing the sale of certain 'food, food products or groceries'.
The case is good news for landlords and anchor tenants as it illustrates that exclusivities and restrictive covenants in leases will be enforced by the courts. For tenants, the case emphasises the importance of careful drafting of restrictive covenants and defined terms in retail leases given the significant implications for tenants on what they can and cannot sell where another tenant (usually an anchor tenant) benefits from an exclusivity in relation to the sale of certain products which is implemented by way of restrictive covenant in the other tenants' leases. Our briefing on the case is here.
Court orders specific performance of Agreement for Lease
In Ace Autobody Limited v Motorpark Ltd3 the Court of Appeal overturned the High Court's decision not to grant specific performance of an agreement for lease. The case is a reminder that acts of part performance can constitute evidence of an intention to be bound.
The Court of Appeal, in proceedings whereby the High Court dismissed a claim for specific performance of an alleged agreement between the plaintiff and defendants to grant it a ten-year lease of a body shop unit, allowed the plaintiff's appeal and found that the plaintiff was entitled to a decree of specific performance, on the grounds, amongst others, that the trial judge overlooked material aspects of the evidence and erred when overlooking or downplaying actions by the plaintiff which constituted sufficient acts of part performance.
Landlord can reasonably withhold consent to assignment on the ground of good estate management
In Cambervale Ltd v Westside Shopping Centre Ltd4, a Circuit Appeal, Simons J allowed the appeal by the landlord of a shopping centre against the Circuit Court's declaration that it had unreasonably withheld consent to the assignment by the tenant of a unit held under a 500-year lease (with a permitted user as a licensed premises) to a company proposing to use the unit as a community centre.
The court held that the withholding of consent was not informed by an ulterior motive and was consistent with good estate management. The proposed use as a community centre was deemed unsuitable for the shopping centre. The court accepted the expert evidence provided by the landlord and the tenant failed to provide contrary evidence.
No Lease Frustration by Covid-19
In Foot Locker Retail Ireland v Percy Nominees5, the Court of Appeal held that the concept of "partial" or "temporary" frustration of a lease does not exist in Irish law.
The High Court had dismissed Foot Locker's claim that it was entitled to not pay rent between March and June 2020 when its store was closed on the basis that the lease was partially frustrated by Covid-19 restrictions.
Wind Turbine Noise Amounts to Nuisance
The High Court has found that wind turbine noise amounted to a nuisance and that local residents were entitled to damages.
The High Court found that wind turbine noise levels amounted to an "unreasonable interference" with the enjoyment of local residents' property. The Court found that two particular features of the noise rendered it an "unreasonable interference". First, there were frequent and sustained periods of noise widely acknowledged to be associated with high levels of annoyance. Even on the most conservative analysis, audio recordings and time domain graphs showed that noise at the plaintiffs' homes exhibited amplitude modulation values in excess of 5 or 6dBA (which, if audible at a sufficient level, suggest an unreasonable impact). Second, the noise exhibited "thump amplitude modulation", which is a characteristic "known to lead to adverse reaction in the community."
In line with the law of nuisance, the court found that having a planning permission does not immunise developers from a claim of nuisance although it accepted that compliance with noise levels in a planning permission can be a factor in determining if there is a nuisance or not.
The plaintiffs' complaints were found to be objectively justified and the court found they are entitled to damages (the amount of which will be determined at a later date).
Footnotes
1. [2024] IESC 14.
2. [2024] IECA 37.
3. [2024] IECA 6.
4. [2024] IEHC 61.
5. [2024] IECA 65.
Read the full update here.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.