Mixed reaction to law banning upwards-only rent reviews

NEW legislation banning upwards-only commercial rent reviews for leases has received a mixed reaction, as it will not apply to current leases and may adversely affect pensions.

A proposed amendment to the Land and Conveyancing Law Reform Bill would target high rents at a time when businesses which can ill afford to pay them.

Retail Excellence Ireland (REI) welcomed yesterday’s announcement by Justice Minister Dermot Ahern, but expressed concern it will not reduce rent for its 8,500 retailers who are locked into current lease agreements.

REI chief executive David Fitzsimons said he was disappointed the legislation would not apply retrospectively.

“Commercial rent is the most critical issue facing the Irish retail industry right now and the fact that the majority of our members are locked into long-term upward-only leases means this legislation will have no consequence whatsoever on their ability to keep trading,” he said.

Mr Fitzsimons compared the average cost of 6.9% of turnover which international businesses pay in rent to the 20% of turnover that Irish retailers are forced to spend.

The Society of Chartered Surveyors (SCS) opposed the legislation, citing the significance of Irish commercial property owned by pension fund institutions.

SCS vice-president Peter Stapleton said: “We believe this move will undermine the value of pension funds at a time when such funds are already in turmoil.”