Business Tenancies Law | Northern Ireland Law Commission
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Business Tenancies Law

The publication of the Report on Business Tenancies completes the Business Tenancies Project. The Report contains our recommendations to Government for reform together with draft legislation to implement the proposals.

The current law governing business tenancies in Northern Ireland, the Business Tenancies (Northern Ireland) Order 1996 contains an absolute prohibition on contracting out of the legislation, giving commercial tenants security of tenure. This is in direct contrast to the position in England, Wales and the Republic of Ireland which allow contracting out of their parallel legislation. Following representations made to the Commission that this prohibition is causing difficulties in some classes of transactions such as outsourcing arrangements, Private Finance Initiatives and Public Private Partnerships this project has been submitted and approved as suitable for the First Programme of Law Reform.

The issue of contracting out of the legislation is an important balancing act to protect the interests of both landlords and tenants. There is a need to ensure that there is sufficient flexibility to give effect to commercial arrangements where both parties have equal bargaining power and the regulatory prohibition serves no useful end but to prevent parties from agreeing mutually satisfactory terms. However this must be balanced against the desirability of safeguards for tenants in the small and medium enterprise sector (on the working assumption that such was the original intention of the legislation).

The provision of contracting out could have the result of effective removal of business tenancies protection from tenants who may have little or no business experience and who are without the assistance of professional advice.

The aim of the Business Tenancies Project was to review the existing law on contracting out of security of tenure and to consider whether there is any merit in amending the current legislation in light of the representations made.

The Commission published a Consultation Paper (NILC 5 (2010)) discussing these issues and the various options open for consideration. A consultation period ran from 1 June 2010 to 30 September 2010.

Following an analysis of the responses to the Consultation Paper the Commission formulated the final recommendations and draft legislation contained in the Report. Our final recommendations represent a compromise between the opposing arguments between market freedom and market regulation whilst addressing representations made to us which seemed to suggest that this current restriction is making it unnecessarily difficult to do business in Northern Ireland.

Related documents
Report on Business Tenancies NILC 9 (2011)
Consultation Paper Business Tenancies NILC 5 (2010)