subject: Commercial Tenants & Upwards Only Rent Reviews in Ireland [print this page] Commercial Tenants & Upwards Only Rent Reviews in Ireland
The recently passed Land Law and Conveyancing Law Reform Act 2009 ends the practice of upwards only rent review clauses in all commercial leases. The Act came into force in December 2009. The change will not apply to existing commercial leases but will help for new tenants in tough economic times.
There are a lot of businesses who started up in the last five years struggling due to the high rents they pay for their premises. Commercial reality has already forced a number of landlords to accept lower the rents in difficult commercial times rather than risk loosing a tenant or having to pursue a tenant through the Courts in order to pay the rent or vacate the premises. The relief for new tenants will be that should the economic situation get worse the rent review could actually lead to a reduction in the rent. The change in the law does restrict the Landlords freedom of contract but on the other hand it just reflects the commercial reality in the market place.
Even before the Land Law and Conveyancing Law Reform Act 2009 came into force new leases could be negotiated removing the "upwards only" rent review clauses. I recently negotiated a lease for a client where the five yearly rent review clause will be based on the market rent, whether it is an increase or decrease on the current rent. The landlord conceded this amendment rather than have an empty premises, and my clients will have the comfort of knowing that should the economy suffer further his next rent review could come as a surprising relief.
Some critics have argued that even existing leases should be subject to a suspension of the upwards only rent review clauses. This could be difficult to implement as it would be impossible to predict how long such a suspension should apply or even what indicators should be used to confirm that the economy has recovered. Commercial reality seems to be forcing the hand of landlords and I don't think there would be any further advantage to having government prescribe any changes to existing leases.
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