Many property occupiers hoping to escape high rents agreed in the boom years were hoping that Ireland would start a trend to be followed by the Westminster Government. Ireland’s government had pledged in their election manifesto to ban upwards-only rent reviews, however they are now likely to drop these plans.
The majority of leases granted on commercial property are contracted on upwards-only rent review terms which help to ensure that commercial property remains an attractive investment opportunity. Yet in a market where rents are falling in many locations, upwards-only reviews can leave tenants burdened with above-market level rents.
Goadsby have a dedicated landlord and tenant department with expertise in advising on rent reviews. Liam Small, a recent addition to the Southampton Commercial Office, commented “At present, the presumption is often that there will be no scope for an increase at review due to limited economic growth. However, not all rent reviews are upwards only and not all are linked to market levels. The lease defines how the review rent is to be calculated and this can be using a variety of methods which include being linked to RPI, turnover or even rises in the price of commodities.”
Commercial landlords and tenants are strongly advised to seek professional advice starting from about 6 months prior to the relevant review date to ensure the most advantageous outcome.
