Negotiating a Commercial Lease for a property can be a tricky business. Before legislation was enacted
in 2009 all Commercial Leases were subject to Upward Only Rent Reviews every five years.
This means that after five years the rent went up. Since 2009 there is now provision for rents
to be negotiated downwards as well as up. Of course, this remains the case even though
the commercial property market is now stabilising.
The recent Supreme Court decision in the Bewleys case was the decision that current
tenants have been patiently awaiting. The background to this case is that Bewleys signed
up to a 35 year Commercial Lease with five yearly rent reviews from January 12
th, 1992. When the rent
came for revision in 2007, before the crash, the rent was reviewed at €1.46 million, which
has been described as “oppressive” by lawyers for Bewleys.
Mr. Justice Peter Charleton in the High Court agreed that there was ambiguity in the Lease
which essentially meant that it could be interpreted either in favour of Bewleys or the
Landlord. The case went to Arbitration without success before going to a five Judge
Supreme Court, who unanimously found in favour of the Appeal by the Landlord.
Essentially, what this means now for Tenants is that there is some closure and that the best
way to renegotiate the terms of a Lease is to talk directly with your Landlord. Depending on
the property that you are in and your financial situation a Landlord may look at it and take it
back or allow the rent to be renegotiated. Please bear in mind, in light of the Supreme
Court Ruling, that he is under no obligation to do so and that you are tied into any signed
Lease, draconian or not.
It goes without saying that all the terms of a Lease should be closely looked at when you are
negotiating commercial property but in particular there are certain terms that must be
forensically examined, one of which is the rent review clause and how that is to be
negotiated in the future.