Bid to clarify law on rent reviews

COMMERCIAL tenants can terminate their leases under proposed legislation to end upward-only rent reviews, a financial blog reported yesterday.

During the election, the Government promised to end upward-only rent reviews to ease the burden on retailers.

However, uncertainty over the legislation, expected to be in place by the end of the year, has worried overseas property investors.

NAMA Wine Lake, an anonymous blog on the progress of the state-run group, the world’s largest property fund, posted yesterday what it said were the main parts of the proposed legislation.

No one from the Department of Justice was immediately available to comment.

According to the blog, the proposals would allow a tenant to apply to the courts for a lower rent but if either the landlord or the tenant are unhappy with the court-determined rent then either party can terminate the lease within six months of the court’s determination.

Any new rent that is agreed will apply for five years, after which it will either stay the same or increase to the market rent, the blog said.

The legislation will only apply to commercial leases created before February 28, 2010, as the previous government banned upward-only rent reviews on all leases signed since then.

The Government’s plans to retrospectively ban all such reviews has effectively halted activity in Ireland’s commercial property sector, causing a huge headache for NAMA, which is trying to turn a profit on the €71 billion plus of property loans it acquired to deal with the country’s financial crisis.

NAMA acquired the loans at a 58% discount but a study by Ireland’s Society of Chartered Surveyors warned that the Government’s plans could knock prices by a further 20%.