Sign in. It’s quick, free and it’s up to you.
An account is an optional way to support the work we do. Find out more.
OWNERS OF THE Bewley’s building on Grafton Street in Dublin are in the Supreme Court today in an attempt to overturn a decision that the Bewley’s rent must be allowed to fall to market value.
Ickendel Limited, which is controlled by Johnny Ronan, argue that the 35-year lease signed in 1987 is reviewed every five years and has increased upwards on each review.
The initial rent in 1987 for the building was €213,000 but this had increased to €1.46 million when reviewed in 2007.
In a High Court case heard a year ago, the court heard that the subsequent review in 2012 was the first in which there was a dispute about whether the review is upwards-only or downwards-possibly.
Justice Charleton had ruled that from 2007 to 2012 there “had been marked deflation in the rental and housing purchase sector” and that “the last rent fixed was at the height of the property price inflation that undermined the Irish economy”.
He further added that there are leases where there is “an express clause making it clear that on review of rent, the sum payable is never to drop”.
“Such a clause, one that in effect copper fastens a meaning… does not appear in this lease,” he had decided.
In essence the fact that that the words “upwards only” do not appear in Bewley’s lease appeared to be a deciding factor.
Two sides
The tenant had argued that the clause in the contract meant that the first rent fixed in 1987 is the base line below which a rent cannot go, but that each rent fixed afterwards was reflective of market value.
Ickendel, whose loans have been transferred to NAMA, accepted that if there is a deflation in property prices the rent would not be increased. The do
The High Court judge accepted that had markets rents increased between 2007 and 2012 then there may be an arumenmt for a rent increase but that in this case rents had “markedly changed for the worse”.
To embed this post, copy the code below on your site
The landlord is greedy and chancing his arm.
The landlord is broke and chancing his arm!
I think the upwards only clause is the real problem here. Theres no justification for it and is effectively baring market forces from working.
This is a landmark case.
Upward only rent reviews over 35 years…. The fact that there are people out there that would agree to this in the first place makes them total idiots… Reminds me of goodfellas… Oh your business got hit by lighting yeah…. F**k you pay me..!
There is no upwards only clause in this case hence the High Court decision.
The landlord is the country (me, you, everybody), we own the company that controls the lease.
The Irish commercial property market is an organised cartel.
This cartel imposed the most draconian commercial property lease law i.e upward-only rent reviews tied to very long leases, on all Irish commercial tenants. No other commercial tenants in the world had to endure this feudal lease law. This feudal lease law inflated commercial property rents and prices. The commercial property bubble is a direct consequence of this lease law.
In March 2011 the government, in it’s program for government pledged “We will pass legislation to ban upward only rent reviews in existing commercial leases”. The cartel responded immediately. ” Ireland First” a group of seventeen business experts including a former Fine Gael Taoiseach and two tax exiles, and “Property Industry Ireland” a group representing the property industry including a former Fine Gael Taoiseach’s son,were some of the cartel’s lobbyists. On 6th December 2011 MInister Noonan announced to the Dail that the government were not proceeding with this reform. The people have voted to abolish upward-only rent reviews-that is their democratic choice based on a single transferable voting system we have in place-but the government is ignoring the democratic will of the people and saying the cartel’s rights trump democracy. They are allowing the cartel to veto the orderly adjustment of the commercial property rental market. In Ireland the vested interests always win out over the public interest. This cowardly and disastrous u-turn has destroyed tens of thousands of sustainable Irish jobs and businesses. It has created a dysfunctional two-tier commercial property rental market which will undermine the recovery of the economy and the commercial property investment market.
Kerins and Flannery were involved in that lobby group as well apparently.
Here’s the full list: Angela Kerins, (co-chair) ; Philip Lynch (co-chair); Michael Berkery; John Bruton
Leslie Buckley; Pat Cox; Dermot Desmond; Frank Flannery; Ray MacSharry; Denis O’Brien; Sean O’Driscoll; Michael O’Flynn; Mike Soden; Michael Somers; Dick Spring; Peter Sutherland and Brendan Tuohy.
What a list of patriots.
But upward only contracts keep our betters in the life they are accustomed and entitled to. Great bunch of lads.
Aaaand the usual comments.
This case isn’t about whether upward only rent reviews are legal in new leases. They aren’t. It isn’t about whether upward only rent reviews are legal in old leases. They are. The only issue is whether the clause in this particular lease was an upward only clause in the first place. The High Court says it wasn’t.
I thought new leases didn’t have these type of upward only clauses at all.
Wish Ronan would fu** off back to Morocco on his private jet and never come back
The government’s u-turn on it’s program for government pledge to ban upward-only rent reviews in existing commercial property leases;
It was agreed budget day would be the least bad day to make the announcement. Minister Noonan mentioned landlords compensation to get Minister Shatter off the hook. Gerard Hogan SC had dealt with this point in his legal opinion,landlords were entitled to market rents,but not to compensation. In May 2011 Minister Shatter had stated to the Irish and international media there was an emergency job crisis and under article 43.2.2 of the constitution,in the “exigencies of the common good”, banning UORRs in existing commercial leases was vital. Furthermore Minister Shatter stated it wouldn’t effect Nama’s valuations. He had a copy of the esteemed senior counsel Gerard Hogan’s opinion and Colm McCarthy’s report to support this position.
Democracy was overturned,the cartel had triumphed.
Greedy and a joke that he should per sue this…upward only rent days are gone
Haven’t noticed bewleys dropping their prices since 2007 … Double standard
Maybe they would if their rent came down.
Maybe they should lead by example.
Good business acumen there, “let’s reduce service prices that will make our landlord happy and he will then reduce our rent”
Let’s continue to charge massive money to stupid idiots and then cry poverty to our landlord.
As my solicitors informed me, give a lease with no mention of any clause or rent review. When it’s over simply start a completely new contract and charge what you like. It’s that simple. Same principle applies to labour, zero hour or short term contracts protect your interests best. Any issue just kick them out or don’t renew.
Easy to see what kind of properties you rent.
The tennent signed the lease with the upwards only rent review clause.
No. The person commenting on the Journal article didn’t read it properly.
And then the economy collapsed.
It’s the journals fault.
This is disgraceful creeping communism that a judge can decide the price that a private citizen is allowed charge for a good. Disgraceful absolutely disgraceful
He’s not deciding the price he’s deciding whether it’s legal and part of the contract to charge them a few hundred percent above market value, maybe read the article?
On page 92 of his ground breaking book ” Breakfast with Anglo” the distinguished Irish developer,columnist and author Simon Kelly states “The building was occupied by a tenant,but they were breaking their lease early and paying six years rent to get out. That seemed CRAZY to me, but it was an institutional tenant, and there’s no accounting for their logic.”
Indeed Simon Kelly is spot on –it is Crazy. Ireland has the most anti-tenant commercial property lease law in the world i.e. ratchet upward-only rent reviews tied to very long leases, some like Carrisbrook House Ballsbridge for sixty five years,but mainly for thirty five years. In all other countries lease lengths for commercial property and residential properties are similar, at say five years.l
The payment of rent is governed by the provisions of the lease. US leases are of varying lengths but rarely for longer than ten years and often for 3-year periods; Australian leases of grade A and premium office appear similar to the US. Leases in the Far East are often shorter still. The tendency in the UK is towards 5,10 or 15 year leases, but it is now not uncommon for industrial and office leases to include breaks,normally timed at 5-year review date. In continential Europe 3-10 year leases are very common.
The regularity with which rents may be increased also differs throughout the world. While in the US,Hong Kong and Singapore the 3-year lease is usually at a fixed rent and the Australian office and retail leases include annual fixed or consumer-price-index reviews, the continental European leases often have rents indexed annually. Longer North American leases may have rents tied to the rate of inflation or,more often, to tenants turnover; this is rare in the UK. Change to the UK commercial leasing regime has been one of the most important property market issues since the UK PROPERTY CRASH OF 1990
No other government in the world would sign these ruinous leases, and waste billions of it’s citizens money.
have your say