Madam – The arguments put forward by Anthony Harris (April 1st) make neither a convincing nor compelling case in support of retaining upwards-only rent reviews for existing commercial leases.
He argues that introducing upwards and downwards rent reviews will precipitate a significant reduction in the value of Nama’s loan book that Irish taxpayers will have to make up. This fails to take into account the €600 million annual cost of paying unemployment benefits to the 30,000 retail workers whose jobs are under threat and the current cost of close to €1 billion per annum in unemployment benefit to those who have lost their retail jobs due to upward-only rents.
Furthermore, rent review reform would enable the retail industry to create 20,000 new retail jobs over the next three years. Finally, Mr Harris’s argument ignores the benefits to the State, as Ireland’s largest tenant, of lower rent.
By asserting that retailers facing business failure are simply victims of their own over-ambition in better times, Mr Harris misses an important fact – the average Irish retail lease is 14 years old. The average leaseholder has been through at minimum two aggressive upwards-only rent reviews where rents have grown aggressively thanks to a failed arbitration /appeals process.
While undoubtedly under pressure from the fall of over 30 per cent in sales volumes since 2008, the majority of existing Irish retail leaseholders have sound businesses but are victims of a rigged system of rental valuation.
The solution lies in facilitating them in adjusting large costs such as rent to reflect the new business realities. The outdated and internationally unique system of upwards-only rent reviews is one of the biggest threats to Ireland’s 250,000 retail jobs.
The new programme for government is cognisant of these facts and we look forward to its speedy implementation. – Yours, etc,