Working group to examine rent reviews in existing commercial leases

THE ISSUE of commercial rent reviews in existing leases is to be examined by a working group established yesterday by Minister for Justice, Equality and Law Reform Dermot Ahern.

The group, which will report by the end of June, has been asked to focus on the arbitration process and the adequacy of information available regarding commercial rent reviews. It will also make recommendations for change.

The move was welcomed by Ibec group Retail Ireland and the Society of Chartered Surveyors, who said it could prove to be “an important step in identifying solutions that will satisfy all parties”.

The announcement follows a ban on upward-only rent reviews which came into effect at the end of last month, but at present applies only to new leases.

A number of well-known high street chains have encountered difficulties paying rents negotiated at the height of the property boom since the economy turned for the worse. Last week bookshop chain Hughes Hughes went into receivership, citing problems meeting rents as one of the main factors.

Other well-known retailers such as 3G, Vero Moda and O’Brien’s sandwich bars have experienced similar difficulties.

Italian restaurant franchise Carluccio’s last month closed its premises on the corner of Dawson and Duke streets in Dublin, saying it would not reopen unless it could agree a rent reduction. It resumed trading shortly afterwards following “very constructive engagement” with its landlords.

High-end women’s fashion shop Monica John was forced to move premises last year following a dispute about rents with its long-term landlord, which saw it evicted from its premises on South Anne Street in Dublin.

Mr Ahern said it was “in the public interest that there is confidence in the system whereby rent reviews are determined in the commercial sector”.

Fine Gael TD Damien English criticised Mr Ahern’s decision, and accused the Government of setting up “yet another talking shop” at a time when hundreds of businesses were struggling to make ends meet. “Mr Ahern’s response is a blow to all business owners hoping for a quick intervention from the Government.”

The Labour Party yesterday tabled a Private Members’ Bill to allow for a downward review of commercial rents on existing leases. It is to be debated on Tuesday and Wednesday.

Labour TD Ciaran Lynch said the Government had argued that to apply the principle of a downward review to existing leases would be unconstitutional. “This is contrary to the legal advice available to the Labour Party,” he said.