A group of almost a dozen of the State’s foremost voices of industry, business and the retail and commercial sector today demanded action by the Government to end upward only rent reviews.
The group, representing thousands of retailers, small and medium business, exporters and industry, said the Government could no longer sit on its hands and hide behind legal advice that had the effect of devastating shops and commercial outlets across towns and cities around the country.
The group wants legislation tabled and passed in the Seanad to be given the green light by Government in the Dail. The legislation, introduced by Independent Senator Feargal Quinn, needs to be enacted urgently.
A spokesperson said: “Quite simply, Senator Quinn’s legislation should be enacted by the Dail and by all means let it be referred by the President to the Supreme Court to test its Constitutionality. This at least would end once and for all this blanket ban on changing what is an unjust law under the guise of legal advice.”
The spokesperson said: “The Government might think this problem has gone away but it hasn’t. Many small businesses and retailers are still struggling to cope with high rents which, when combined with low levels of consumer spending, puts their very survival on the line. For many small businesses it’s too late; they’ve already had to close down and many more are on the brink of doing so.”
“Upward only rent reviews don’t affect individual shops only as there is the knock-on effect when shops close. It’s devastating entire streets, city and town centres as well as commercial areas. Businesses are struggling because high rents are putting shops under pressure. There’s been a recent boost in consumer spend, with positive news on retail sales and employment, but we need the right conditions to achieve a sustainable recovery. High rents which can only go up costs jobs and impedes growth.”
“We are demanding today that the Government honours its commitment in the Programme for Government and enact legislation to deal with the legacy issue of upward only rent reviews. We have Senator Quinn’s Bill which is a means of rectifying the problem. It needs to be enacted without further delay.”
Regarding the Constitutional hazards of legislating in this area, the spokesperson added: “Advice from Senior Counsel provided some time ago on this topic has made it very clear that legislation to address upward only rents would be Constitutional. Our position is that the legislation should be enacted and by all means let it be referred to the Supreme Court.”
The group comprises the following: Convenience Stores and Newsagents Association; Irish Commercial Tenants Association; Design & Crafts Council of Ireland; Irish Exporters Association;Irish Hotels Federation;Irish Small and Medium Enterprises Association; Retail Excellence Ireland; Retail Ireland; RGDATA; Small Firms Association.
Programme for Government
At page 10 of the Programme for Government, under the heading “Supporting SMEs, the Government parties pledged: “We will legislate to end upward only rent reviews for existing leases.”
Senator Feargal Quinn’s Bill
Senator Feargal Quinn’s Upward Only Rents (Clauses and Reviews) Bill 2013 was passed by the Seanad on 26 February 2014.
The purpose of Senator Quinn’s Bill is to address the problems posed by upward only rent review clauses which are contained in commercial leases entered into before 28 February 2010.
Senator Quinn’s Bill does two things:
firstly, it introduces a special rent review process which the commercial tenant can invoke in pursuit of a reduced level of rent. In order to succeed, the tenant would be required to show that his or her business is in distress and its viability will be assisted by a reduced level of rent, and
secondly, it is designed to ensure that where a rent review process which is provided for in a business lease takes place, irrespective of the terms of the lease, the outcome of the review process can be either that the level of rent payments may remain as they are or that they may be reduced.
The Bill is a transitory measure which will lapse after 5 years.
Section 19 of the Residential Tenancies Act 2004 has addressed the problem of upward only rent review clauses in the context of dwellings. Section 3 of that Act indicates that it applies to leases created either before, or after, the passing of the Act.
Section 132 of the Land and Conveyancing Law Reform Act 2009 dealt with upward only rent review in commercial leases on a prospective basis. The effect of this provision has been that rent review clauses contained in commercial leases, entered into after 28 February 2010, are to be interpreted as providing that the level of rent payable following such a review may be fixed at an amount which is less than, greater than or the same as the amount already being paid. In plain terms this means that the trajectory of rent can be downward and not just upward only.
However, the problems posed by upward only rent review clauses which are contained in commercial leases entered into before 28 February 2010 remain problematic and have led to numerous business closures and job losses .