Landlord representatives today slammed a new ban on upward-only commercial rent reviews as short-sighted and damaging to the economy.
Justice Minister Dermot Ahern said the time had come to outlaw the controversial clauses, which were attacked by struggling firms as the grip of the downturn tightened.
But the Irish Auctioneers and Valuers Institute (IAVI) claimed the ban, which comes into place in February, had been imposed without full knowledge of how the market operates.
“There wasn’t really any opportunity for proper dialogue, the Government simply bowed under pressure and I hope we don’t pay a serious price for it down the road,” IAVI chief executive Alan Cooke said.
“I think it’s going to lead to more short-term leases, which in itself doesn’t help development or confidence going forward.”
Mr Cooke warned future uncertainty in rent levels could also hit pension funds.
“This isn’t David and Goliath – the landlords are largely pension fund driven and anything that impacts on that impacts on all of us negatively,” he added.
Dermot Ahern said he was committed to going ahead with the ban.
“I look forward to more equitable business arrangements being put in place in the future which take account of the reality facing many business owners and retailers,” he added.
Meanwhile, Retail Ireland’s Torlach Denihan welcomed the move but warned it could be years before many commercial tenants would see the results.
“You’ll benefit from it when your rent is next up for review and you won’t face upward-only, but quite a number of people are stuck in a situation at the moment where their rents aren’t up for review for several years and they’re at an unsustainable level,” he said.
“Landlords should really do their bit now and act in a sensible way when it comes to rent, if nothing else then to protect their own businesses.”