Commercial Leases – Abolition of “upwards only” rent reviews

On the 1st of December last the Minister for Justice Equality and Law Reform Mr Dermot Ahern, signed into law Statutory Instrument no. 471/2009, enacting the commencement date for section 132 of the Land and Conveyancing Law Reform Act 2009.

This provision concerns the abolition of “upwards only” rent reviews. It has long become a commercial norm for attractive rental units to specify that the rent reviews (typical 5 yearly) would result in a rent that was either too higher or the same as the immediately preceding rent at the date the rent review was scheduled. This was determined by the open market rent for a vacant unit of its type at the time the review was being carried out.
Minister Ahern stated: "The practice of including upward only review clauses in business leases is a deeply entrenched one. The time has come to end this practice."

The effect of section 132 is that, for any lease entered into after the 28th of February 2010, rent review provisions in the Lease will now be interpreted as meaning the then “open market rent” irrespective of the level of rent that was payable under the lease prior to the date of review.