The hands of companies seeking to enter into mutually beneficial commercial property arrangements are being tied because of the failure of successive Governments to carry out a proper overhaul of the country's landlord and tenant legislation.

This is the view of Professor John Wylie of Cardiff University, author of the leading textbook on Irish landlord and tenant law and consultant to law firm A & L Goodbody. His view is shared by other leading practitioners in the field.

The real problem is that tenants in occupation of premises under most commercial leases acquire full rights once they have been in possession for a period of five years. They are then entitled to an automatic extension of the lease thereafter provided they do not, for example, default on payments of rent.

"Our landlord and tenant law is rooted in the past when many landlords were absentees living in England and tenants were little old ladies operating in corner sweet shops," he says.

In effect, landlords and tenants were considered to be in an unequal bargaining relationship and, from 1860, a succession of Acts underpinned the position of tenants.

Most commercial tenants nowadays are large business entities, well able to negotiate fair deals with landlords. Many are multinational corporations.

In 1994, some changes were introduced on foot of a private members' Bill introduced by the Fine Gael TD, Alan Shatter. Tenants may agree to waive any rights they may acquire by law after five years' occupancy where they are leasing office space. This is an important relaxation. However, it is important that strict formalities, including the signature of waivers and discharges are adhered to, according to Paul Eustace, a partner in the law firm, Dillon Eustace.

A user clause must also be inserted in the lease to the effect that the premises will be used "wholly and exclusively as an office" as otherwise the waiver will not be effective. There can be problems where the agreement covers car-parking. Can it be said that the premises is being used wholly and exclusively as an office ?

Landlords and tenants have been known to agree to a fiction where the tenant moves out of the premises for a week in order to break up the period of occupation and prevent full rights being acquired.

The courts, however, may choose to regard this as an attempt to defeat the legislation. It could be dangerous for a landlord to rely on what amounts to a fiction in the event of a later disagreement with the tenant.

Most landlords are more than happy to give long leases to large corporate tenants. Indeed, it is these tenants who are reluctant to enter into long leases and who have insisted on break clauses.

HOWEVER, landlords are more reluctant to allow smaller companies to acquire full rights. Prior to 1994, many small firms found it hard to secure other than very short leases on office premises.

Currently, there are real problems in the case of franchise arrangements. The problem arises where the franchisor is seeking to terminate the franchise deal and take back the premises which has been used as a restaurant or fast food outlet.

The landlord may end up having to pay off the franchisee.

Lawyers believe that commercial arrangements such as 20-year franchise agreements should not be covered by landlord and tenant legislation.

Should full rights accrue, the consequences can be serious.

According to Paul Eustace: "To an extent, the tenant now has the whip hand. He has got all the statutory protections. This can cause problems where there is a personality clash between landlord and tenant".

As Michael Roche, a partner in the McCanns law firm, points out, a landlord would have to prove a need to reoccupy the premises for his own use or an intention to redevelop the property to defeat the rights of a tenant with "full" rights.

The scheme would have to be a genuine scheme for redevelopment for which planning permission has been obtained.

Of course, failure to pay rent or to keep the premises in proper repair could also ensure that the tenant is moved.

While it is important not to overstate the problem, you can have situations where client firms have to keep moving every few years because landlords are reluctant to see them acquire full rights.

Ironically, it is smaller operations, the intended beneficiaries of the legislation, who have suffered the most.

A more ominous recent trend is that of the imposition by shopping centre landlords of huge rent increases on rent reviews.

THE effect of this is to force tenants out of premises which they may have improved and developed over the years.

In John Wylie's view, many problems are arising in the interpretation of leases which are never reaching the public eye as the parties are keen to settle out of court. In particular, disputes are arising over the issue of who is responsible for repairs.

He is insistent, however, that current protections for commercial tenants are outdated.

In his view, it is now time for the Government to consolidate existing legislation on landlords and tenants into one Act which recognises the reality that landlords and business tenants are now able to deal from a position of equality.