Upward-only rent reviews are set to be banned on existing leases in Ireland if the highly anticipated coalition government is installed.
Both Fine Gael and the Labour party - which are tipped to be voted in as a coalition government - have committed to abolishing the system if they come into power.
Today Fine Gael confrimed it would abolish the system, and on Sunday Labour said it would “as a matter of urgent priority” abolish upward-only rent reviews for all commercial leases in the interests of “sustaining viable jobs and businesses in the retail industry”.
Retail Excellence Ireland (REI) chief executive David Fitzsimons said the likely ban was “seriously significant”. He added: “This is the window of opportunity and it will either happen now or it will never happen.”
Last year the Irish government banned upward-only rent reviews for all new leases signed after February 28, 2010. Fitzsimons said this move was welcomed, but retailers still pushed for the change to existing leases as they continued to struggle with their rent bills.
Abolishing the practice for all leases will assist vulnerable yet viable businesses, bring some clarity to the commercial property market and promote investment in Ireland by international retailers, according to Fitzsimons. “It will also give a good choice for consumers,” he added.
The move will prove a big win for campaigners such as REI and The Grafton Street Tenants’ Association, which has petitioned the European Parliament over what they describe as the “anti-competitive” upward-only rents system.
The Irish election is likely to be called for the end of the month. Polls at the weekend suggested a coalition was the most likely outcome, meaning that if the parties honour their pledges, the lease system could be abolished this year.
Fitzsimons said that tenants with old leases could have their rents reduced 40% to 50%.