Changes to Commercial Upward Only Rent Review May Lead To Less Empty Premises

It is estimated that over 30,000 workers have become unemployed in recent years due to a situation, which it seems, will soon be preventable.  Retail tenants have found it increasingly difficult to survive in business, as their shop doors open less and less frequently, while their rent continues to rise.  Since March 2010 a Working Group, established by the then Minister for Justice, Equality and Law Reform, Dermot Ahearn, TD, has tackled the issue of upwards only rent reviews.  It is now likely that, within weeks, new laws will be reviewed in the Dail, which will help retailers to compete in the commercial market again and job losses for retail workers will be on the decrease.

“The Land and Conveyancing Law Reform Act 2009 rectified increase-only clauses, but only on leases entered into since 28th February 2010.  So for retailers who signed rental agreements before that date, it is virtually impossible for their businesses to survive.  As their profits are decreasing, their rent is increasing – often being the largest cost for businesses.”  said Áine Ryan, Partner at Lynch and Partners Solicitors.  “A change in this area marks a huge advantage for retailers as their livelihood may be restored.”  she continued.

Proposed new laws will abolish upwards only rent reviews.  Commercial landlords will have to be flexible with their tenants and if they refuse to a rent decrease they may face court.  “It is always surprising that there are commercial landlords who would rather their premises lie empty than reduce the rent.”  says Áine Ryan.  “This legislation should mean that the amount of empty premises in our towns will reduce significantly as there should be fewer closures.”

If landlords refuse to negotiate, their tenants can insist on arbitration.  Arbitration is an alternative to court proceedings.  It is a method of resolving disputes where an Arbitrator decides the outcome of the dispute instead of a court.  “For situations such as these, where cost needs to be minimal, arbitration is ideal.  Its advantages to court are speed, less cost and confidentiality.”  said John M. Lynch, Managing Partner at Lynch and Partners, who is a qualified Arbitrator.

Legislation preventing upward-only rent reviews is expected in September when the Oireachtas returns.

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