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Dublin: 14 °C Monday 1 September, 2014

Government admits defeat on upward-only rent reviews

The government formally abandons legislation to abolish upward-only rent reviews, citing conflicts with the Constitution.

Retailers had maintained pressure on the government to ensure that upward-only rent reviews were abolished, as per both parties' government manifestos.
Retailers had maintained pressure on the government to ensure that upward-only rent reviews were abolished, as per both parties' government manifestos.
Image: Mark Stedman/Photocall Ireland

THE GOVERNMENT HAS ADMITTED that it cannot bring in legislation which would abolish upward-only rent reviews in commercial leases – fearing that such legislation would be unconstitutional.

This afternoon ministers Michael Noonan and Alan Shatter said there were four aspects to any proposed laws which could be in conflict with the constitutional – and that the legislation cannot be introduced as a result.

The ministers said any legal change would involve a “retrospective alteration in a contractual right, arising out of a private agreement, which potentially deprives landlords of a significant benefit freely negotiated”.

While NAMA is to publish its policies for dealing with tenants who are having difficulty meeting their commercial rent, the concession means that many struggling businesses will not be able to get the downward revision in their rent that they may have hoped for.

Justice minister Alan Shatter said it was “clear that any legislative scheme, involving as it would an interference in the contractual relationship of private parties, would find it extremely difficult to survive a Constitutional challenge”.

He also warned that the government would could have been liable for compensation to anyone whose property rights were infringed by the laws.

Fianna Fáil’s John McGuinness described the news as “one of the clearest demonstrations yet of the utter cynicism at the heart of Fine Gael’s strategy to achieve power”.

In the Programme for Government, both parties agree that “we will legislate for upward only rent reviews for existing leases”.

Today those promises, both before and after the election, have been completely and utterly abandoned.

The Society of Chartered Surveyors welcomed the government’s news, however, saying it would encourage investment and provide “much-needed certainty” in the commercial property market.

It also heralded the government’s move to cut stamp duty on commercial property transactions from 6 per cent to 2 per cent, and the temporary relief on capital gains tax.

Read: As it happened: Budget 2012 liveblog

In full: TheJournal.ie‘s full coverage of Budget 2012

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