The Grafton Street Tenants Association (GSTA) says they are victims of “economic terrorism” and many retailers in the prime Dublin location could be put out of business within three years.
Legislation came into effect yesterday which bans landlords from inserting controversial “upward only rent review” clauses into their leases but the change only applies to new leases.
The GSTA, which includes well-known operators such as A|Wear,
Bewley’s, The Body Shop, Boots, Sisley, Tie Rack and Tommy Hilfiger, says many retailers are trapped in leases with landlords insisting on rent increases despite the slump in trade.
“It’s a form of economic terrorism that is unbelievable people are getting away with,” said GSTA spokesman John Corcoran, of Korky’s shoe shop, which has seen its rent rise to €450,000 per year from €62,500 when it opened in 1985.
“It doesn’t make sense. What will happen is that I will close my door and the guy who comes after me will pay a lower rent. It will probably take three years to flush out all the current retailers.” The call for the Government to make the new law retrospective or create a mechanism to allow tenants pay a penalty to escape their leases comes just days after Grafton Street fashion store Vero Moda announced its closure along with bookseller Hughes and Hughes on nearby Dawson Street.
Restaurant owner Jay Bourke, who pulled out of one venture at the landmark Bewley’s premises on Grafton Street after his rent almost doubled from €750,000 to €1.45m in the space of a few years, said he now felt like leaving Ireland altogether. “I find it very discouraging. I’m deeply angry,” he said.
Peter McDonald, managing director of The Body Shop, which has seen its rent increase by 400%, largely over the last 13 years, called for incentives for landlords, such as tax breaks, to encourage them to allow tenants break leases.
“There is no point painting us as good and landlords as evil. We need creative solutions. Tax incentives might be one way. When a business like Hughes and Hughes closes, the Government loses out on VAT and income tax from workers and has to pay those people dole so it could be more cost effective to give a tax break that would keep a business open.”
The GSTA says members have had some success in negotiating rent reductions with individual property owners but found institutional landlords such as pension companies were rarely open to discussion.
John Corcoran said the Government should call in the landlords and embarrass them into action.
The Minister for Justice Dermot Ahern, who is responsible for reform of the law, said the legal advice was that existing leases could not be amended but a working group was being considered to examine issues concerning commercial rents.