Rental law reform to help retail but not the rest of us

ONE MORE THING:THE COMPETITION Authority's decision to clear Musgrave's acquisition of Superquinn this week is to be welcomed. It safeguards 2,800 jobs and protects a brand that is warmly regarded by shoppers.

Musgrave was the only show in town for Superquinn, which was burdened with large debts having been taken over by aproperty consortium some years ago.

There is other good news on the horizon in the beleaguered retail sector. Minister for Justice Alan Shatter will soon publish a Bill to abolish upwards-only rent reviews. This practice has already been banned for leases signed after December 2009 by the last government. The new Bill will address leases agreed before that date.

The issue makes most people’s eyes glaze over, but it is hugely important. Many retailers are struggling to meet the terms of their leases at a time when a large chunk of their business has evaporated. This has clear implications for jobs and the health of our economy.

The downside is that virtually all of our pension funds are invested in retail. A reduction in rents will lead to a cut in investment yields. Many of these rents are supporting loans taken out at the height of the boom, when property prices were sky high. It is interesting to note that Nama – now one of the biggest commercial landlords – is not keen on the new legislation.

The Government’s proposals seem reasonable. A tenant who can prove their financial case will be able to seek a review of their lease from the landlord. If this process does not yield a result, a mediator is appointed with the Circuit Court as a further back up if required.

There have been murmurings of constitutional rights being interfered with and talk of legal challenges. Time will tell on that score. One way or another, this issue is likely to keep the courts busy for some time to come.