Madam, – In his letter (March 1st) Colm Lauder of the Cambridge department of land economy attempts to argue against banning upward-only rent reviews in existing leases.
I don’t know what the commercial property market is like in Cambridge, but over here it’s different. The dogs in the street know that there is a large excess supply and that either (a) there is going to be an awful lot of empty property or (b) a significant fall in commercial rents. Does Mr Lauder really think that banks will enhance their financial position by valuing commercial property as a multiple of artificially high rents, while ignoring the effect of zero rents on vacant properties? Or maybe he believes that there are no limits to bankers’ stupidity and everyone else’s gullibility. This is the kind of argument which tends to score an F when found in a student’s essay. – Yours, etc,
Madam, – Colm Lauder (March 1st) makes a number of wide and vague assertions in support of maintaining upward-only rent reviews which are anti-market and are not based on any logic. On what basis can someone argue that the price of an asset can never decrease even if the market price of all other assets is declining?
What other assets continue to increase or maintain their value irrespective of what is happening in the general economy? Does he seriously believe that it is in the interest of property owners to have their lessees go bankrupt and leave their properties vacant for long periods? How does a pension fund get cash flow from a bankrupt lessee? He asserts that an incoming government may be intent on decreasing property values. I would have thought that he would have learned the fundamental economic principle in the venerable institution from which he writes (University of Cambridge), namely that the price of an asset is determined by supply and demand in the market and not by some government action. He might also have learned that the grossly inflated property prices and an inflexible lease and rental market in Ireland are major contributors to our economic difficulties. Investment in Irish commercial and other property will only recover when the market determines that there is value in Irish property. – Yours, etc,