Abolishing upward-only rents to save 15,000 jobs, says Labour

 

COMMERCIAL RENTS:LABOUR has claimed its plans to abolish upward-only rent reviews could save up to 15,000 retail jobs.

The party said it would enact legislation to abolish upward-only rent reviews as a priority for all commercial leases. As an interim measure, it would appoint a commercial rents ombudsman to adjudicate on rents that had the potential to cause a business to fail.

However, property surveyors said the measures would cause massive shocks to the Irish property market at a time when international investors are starting to return.

The Society of Chartered Surveyors has written to all the party leaders arguing against any retrospective ban on upward-only rent reviews. Upward-only reviews for new rent contracts were abolished last year but retailers say high rents and upward-only clauses have cost 35,000 jobs. Labour said the proposals were a response to the suffering of the retail sector resulting from the “property bias” of Fianna Fáil’s economic policy. It said this had seen revenues plunge after the dramatic collapse of the property bubble, with retailers trapped in upward-only leases while consumer demand stagnated.

“These rents were set at the top of the property bubble, so what you have is boom-time rents and recession-time retail incomes,” said Labour’s retail sector spokesman Ciarán Lynch.

Labour published its proposals at a press conference in Korky’s shoe shop on Dublin’s Grafton Street, where the owner, John Corcoran, said he was paying more than €500,000 a year in rent on a 35-year lease with no break.

Mr Corcoran said jobs were being lost because of upward-only rent clauses. The banks had contributed to the problem by lending money on the lease rather than the value of the property. Labour’s justice spokesman Pat Rabbitte pointed out that prime rents increased by 240 per cent between 2000 and 2007, while the consumer price index went up by 30 per cent during this time.

Labour was satisfied that a ban on upward-only rent reviews could be introduced through legislation and a referendum would not be needed, Mr Lynch said.

The party said the proposals are a response to the suffering of the retail sector resulting from the “property bias” of Fianna Fáil’s economic policy. Labour said this had seen revenues plunge after the dramatic collapse of the property bubble, with retailers trapped in upward-only leases while consumer demand stagnated.