The Land Conveyancing and Law Reform Act 2009 abolished upward-only rent reviews for all new leases signed on or after 28 February 2010. However, upward-only rent review clauses continue to apply to leases which were entered into prior to that date.
I am aware, from representations which have been made to me by business organisations, of the difficulties this causes for some businesses in the retail, manufacturing and services sectors.
Despite extensive consideration by the Government, it has not proved possible to develop a targeted scheme to tackle upward only rent reviews in existing business leases which would not be vulnerable to a legal challenge or require compensation to be paid to landlords.
While legislative intervention may not be feasible, the Minister for Finance has outlined the role which NAMA can play in dealing with the problems caused by upward only rent reviews which apply to NAMA properties. NAMA has published policy guidance which will inform the approach to be taken where tenants are experiencing difficulties in paying rents in these cases.
Separately, the Department of Justice and Law Reform has continued to progress the recommendations of the Working Group on Transparency in Commercial Rent Reviews since it reported in July 2010. Businesses can make use of the Rent Review Arbitration Code, which was drawn up by the Working Group, to help to resolve rental issues at a lower cost, in considerably less time, and in a less adversarial way for the parties concerned than through formal legal processes.
The Minister for Justice and Equality, Deputy Alan Shatter, also announced on 4th April last that he had signed the first Commencement Order and the Establishment Order under the Property Services (Regulation) Act 2011. Among the responsibilities of the Property Services Regulatory Authority, which is to be established under the Act, is to set and enforce standards in the provision of property services by auctioneers, letting agents and property management agents and to provide redress mechanisms for consumers of those services. The Authority will also have statutory responsibility for the establishment and maintenance of a Commercial Leases Database which will provide greater transparency in relation to market rental rates for comparable properties.
I believe that these measures will help all rents return to their true market levels.
Question No. 108 answered with Question No. 100.