MINISTER FOR Justice Dermot Ahern has decided to introduce legislation banning the controversial practice of upwards-only rent reviews in commercial leases, The Irish Timeshas learned.
The Minister tabled an amendment yesterday to the Land and Conveyancing Law Reform Bill, which is at committee stage, which will ban upwards-only rent reviews.
"Under the amendment upwards-only rent reviews will, in effect, be prohibited in all new business leases," Mr Ahern told The Irish Times.
“Any rent review clause in such a lease will provide that the rent can go up, down or remain the same by reference to the rent payable immediately before the review date.”
The move will be welcomed by lobby groups for retailers and commercial tenants who have long complained that the practice is damaging their businesses, especially in the current harsh economic climate.
The change will only apply to new leases signed after the legislation comes in, which is expected in late July.
It is understood that Mr Ahern was advised by the Attorney General’s office that the law could not be applied retrospectively to existing lease contracts due to significant legal difficulties.
An increasing number of traders here are seeking rent reductions because of a fall-off in consumer spending. Many landlords are resisting these calls.
This month Retail Excellence Ireland, which represents about 580 retail companies, wrote to TDs seeking support for a Private Members’ Bill that would temporarily suspend upwards-only clauses in rent reviews.
Mr Ahern recently wrote to leading players in the commercial rental sector urging them to take a pragmatic approach to rent reviews in the context of the economic downturn.
“I am very aware that there’s a serious problem that confronts those who are locked into leases containing rent review provisions that are inappropriate to current economic circumstances,” the Minister said.
Mr Ahern said he hoped that this amendment would give a “clear signal” to the market that the existing practice of upwards-only rent reviews must change.
The Bill, which has been on the blocks for about three years, is expected to be passed by the Oireachtas before its rises for its summer recess on July 9th.
