Business groups welcome court decision in upward-only rent case

Irish business groups have today welcomed the High Court's decision in today's case relating to upward-only rents.

Bewley’s Café sought to prevent any increase on the €1.5m a year imposed at the peak of the property bubble in January 2007.

Mr Justice Peter Charleton ruled that the rent must be allowed to drop to a level to reflect the state of the market.

Upward-only rent reviews have been blamed by business chiefs for crippling companies.

The Government has said it cannot move on reform of the system without leaving the state liable for a compensation payout for landlords who lose out.

Keith Rogers, chairman of Retail Excellence Ireland and head of retail at Ecco footwear in Ireland, said the judgment gives businesses hope.

“It’s a landmark ruling, and potentially it has huge implications,” he said.

“Every retailer will be pulling out their leases today and carefully examining them to see if there’s any opportunity to go back to take their prices back from the crazy levels to the actual market value.”

Mr Rogers, who has told his solicitors to examine the business leases, said that the experience of big retailers like Monsoon and B&Q going into examinership demonstrated the impact of upward only rent reviews.

“I see that the only way they can emerge from that in some places is with new rents,” he said.

Irish Commercial Tenants Association (ICTA) today (March 25th 2013) welcomed the ruling.

Speaking on behalf of the ICTA, John Corcoran said: “This is a milestone in the ICTA’s long battle against upward only rent reviews (UORRs).

“In essence this is very positive news, not only for Bewley's which should result in a reduction of the company’s rent bill on Grafton St by up to 50%, but also for commercial tenants and the economy in general.

“The ruling today will enable Bewley's, an iconic business to continue trading on one of Dublin’s most important retail streets, where other businesses over the past number of months have failed due to oppressive rents.

“It will also protect jobs which are vital to preserving this economy.

“Our hope today is that tenants around the country will be prepared to take further action against UORRs and feudal leases which are anti competitive and anti business and contributed and led to the commercial property bubble in Ireland.

“In addition there may be opportunities for tenants in these leases to seek compensation."

Stephen Lynam, director of Retail Ireland, part of the business lobby group Ibec, cautioned however that the judgment may not lead to widespread reversals of upward- only rent reviews as leases differ.

“Many retailers will be examining their own leases to see if they could benefit from a similar judgment,” he said.

“Upward-only rent reviews have put immense pressure on the sector, which has seen numerous store closures and over 50,000 job losses since 2008.”