Richard Bruton (Dublin North Central, Fine Gael)

Policy responsibility for upward-only rent reviews comes within the remit of the Minister for Justice and Equality, Deputy Alan Shatter. I do not have specific data on the impact of upward-only rent agreements but the National Competitiveness Council provides some data on rents generally. Rent represents an average of 2% to 7% of total costs for manufacturing businesses, and 5% to 6% of total costs for services businesses. The council reported in its Competitiveness Scorecard 2011 that Ireland experienced a fall of 22% in rental costs for prime industrial sites in 2010, with a decline of 12.3% in prime office space rental costs. Both of these were the largest annual declines experienced across the countries benchmarked and both marked a continuation of falling prices seen since the peak in 2007. Rental costs in many of Ireland's competitor economies rose in 2010. Nonetheless, upward-only rent reviews have kept rents for many businesses at an artificially high level compared to open market trends and property values. My Department does not have data on the extent of renegotiation that has occurred.

The Land Conveyancing and Law Reform Act 2009 abolished upward-only rent reviews for all new leases signed on or after 28 February 2010. However, upward-only rent review clauses continue to apply to leases which were entered into prior to that date, impacting on the competitiveness of businesses. The Minister for Justice and Equality is continuing to work on legislative proposals in this area and is receiving advice from the Attorney General.

In the meantime, I urge businesses to make use of the rent review arbitration code, which was drafted by the working group on transparency in commercial rent reviews in 2010. The aim of this code is to make the arbitration process more straightforward, particularly for those businesses who may only rarely be involved in rent reviews and arbitration proceedings. The code is intended as an addition to the Arbitration Act 2010. It cannot override the mandatory provisions of the Act but it provides a mechanism to deal with disputes on commercial rents which can help to resolve issues at a lower cost, in considerably less time, and in a less adversarial way for the parties concerned.

Additional information not given on the floor of the House

The working group on transparency in commercial rent reviews also recommended the establishment of a public database containing relevant details of letting arrangements and rent reviews in the commercial property market. The database, which will ensure transparency in the market and allow all parties to access relevant information, will be established under the Property Services (Regulation) Bill 2009, which has already passed through the Seanad, with Report and Final Stages due to be held in this House later today.

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