It is a tough time to be in business and managing costs is crucial to survival. Ask any business owner about the costs of running their business and rent will feature as a significant expenditure. One of the key election commitments of the current Government was a pledge to abolish upward only rent review clauses for commercial leases.
In 2009 we saw the abolition of upward only rent reviews for leases signed post December 2009. However, leases pre-dating December 2009 can still be subject to these upward only rent reviews. This has created inequity in the commercial rental market and has led to job losses and the demise of many businesses.
Under proposals currently under consideration, it is reported by the Irish Times today that the Government is preparing to give commercial tenants the right to seek a review of their rental agreements from their landlords in the proposed Landlord and Tenant (Business Leases Review Bill).
According to the article published in today’s Irish times (see link below), where a tenant seeks a rent review a four week consultation period would follow and if no agreement is reached, the parties would enter a compulsory mediation process. If a resolution could not be reached via mediation, parties could apply to the Circuit Court for a ruling.
The Irish Times further reports that to enter this process tenants would have to establish that their rent is in excess of market rents, that their company/business is vulnerable and lowering the rent would increase the chance of business success.
Without a doubt, upward only rent reviews do not reflect the reality of the times we live in. When a business is struggling, negotiation is key to survival and introducing a mechanism to facilitate rent reviews is a step forward towards job retention, business survival and getting this country back on track.
Taylor Solicitors Cork
Link to article Irish Times 28.09.11: http://www.irishtimes.com/newspaper/finance/2011/0928/1224304856477.html