Ireland’s Justice Minister Dermot Ahern is to ban the use of upward-only rent reviews from the end of this month for all new retail leases.

Ahern has introduced special legislation to implement the ban, which will only cover new leases signed after it comes into effect. He said “significant legal difficulties” meant it was not possible to apply the ban retrospectively to existing leases.

The move has been welcomed by retailers. Retail Excellence Ireland, which represents some 8,000 stores, called the legislation “a positive development” although it believes the ban should also be applied to existing leases, as do many retailers.

Chief executive David Fitzsimons said: “The fact that existing rents cannot be decreased means the sector is haemorrhaging businesses and jobs at an alarming rate. For the majority of our members, locked into long-term upward-only leases, this legislation will have no impact on their ability to keep trading.”

The move follows Ahern’s plea to landlords in May to adopt a “flexible and pragmatic approach” to rent reviews to help retailers through the recession as the country suffers its worst retail sales slump for 25 years.

Ahern wrote to several firms in the retail property sector including surveyors, lawyers, pension funds and auctioneers, to urge them to consider alternative leases.

Fitzsimons said at the time that rent rises were the biggest contributing factor to the failure of businesses in the sector. In May this year, Bancastle, the company behind the Pia Bang home furnishings shop on Dublin’s South Anne Street, went into liquidation.

The owner of the eponymous stores, Pia Bang, said at the time that landlords needed to come to “feasible arrangements” with retailers. She said: “We were forced into this because of the downturn and because of the rent.”

Ireland’s Society of Chartered Surveyors has voiced concern that the legislation could undermine the value of pensions, as a significant amount of commercial property is owned by the pension funds.