MINISTER FOR Justice Dermot Ahern has warned that he may bring in legislation providing for downward rent reviews for the first time in the retail sector unless landlords take “a flexible and pragmatic approach”.
He is also writing to a range of organisations urging them to look at alternatives to existing practice. These include: the Irish Auctioneers and Valuers Institute, the Society of Chartered Surveyors, the Law Society of Ireland, the Irish Association of Investment Managers and the Irish Association of Pension Funds.
David Fitzsimons, chief executive of Retail Excellence Ireland (REI), which represents 580 companies with 8,000 shops, said he would warmly welcome a change in the law.
The legislation “should be amended to outlaw upward-only rent reviews”, Mr Fitzsimons said, adding that rent increases were now the biggest contributor to business failure in the sector.
Following a meeting with REI last month, the Minister asked his officials to examine possible measures to assist the sector in dealing with the “difficult situation” arising from upward-only rent reviews.
“There seems to be a growing awareness that, in current circumstances, rents need to be reduced if businesses are not to fail with, from the landlord perspective, consequent adverse impact on rental income and investment,” said a spokesman for the Minister.
“The Minister is of the view there needs to be a flexible approach taken to rent review negotiations.”
The Minister’s spokesman referred to provisions in the 2007 Law Reform Commission report, The Law of Landlord and Tenant, and said that it “envisages the possibility that the rent may move downwards as well as upwards”.
The spokesman said a reference to the rent review issue could also be included during the second stage of the forthcoming Property Services (Regulation) Bill.
The Minister is to write to a range of bodies involved in the property area urging a flexible approach be taken to rent reviews.
He will ask them to consider how best “you and your members might contribute towards ensuring that we continue to have a dynamic and vibrant retail sector which supports employment within the economy and which, at the same time, provides an appropriate return for those who have chosen to invest in this sector”.
