Commercial Rent Reviews in Ireland: What Business Tenants Need to Know
Commercial Rent Reviews in Ireland: What Business Tenants Need to Know
Commercial rent reviews are one of the most significant financial events in a business tenancy. Getting them right — or wrong — can mean the difference of tens of thousands of euros per year in rent for the remaining term of the lease. This guide explains how commercial rent reviews work in Ireland, what the upward-only rule means in practice, and how to approach a review to protect your business.
What Is a Rent Review?
Most commercial leases in Ireland include a provision for periodic rent reviews — typically every 5 years. A rent review is a mechanism for adjusting the rent payable under the lease to reflect current market conditions. The review date, frequency, and mechanism are all set out in the lease itself.
The Upward-Only Rent Review
The most common — and most controversial — type of rent review in Irish commercial leases is the upward-only rent review. Under this mechanism, the rent can only be reviewed upward to the open market rent, or remain unchanged if market rents have fallen — it can never be reduced. This means that even if commercial rents in your area have fallen significantly since the lease was signed, you will continue to pay the rent set at the last review unless that rent is itself below market.
Upward-only rent reviews for new commercial leases entered into after 28 February 2010 are prohibited under the Land and Conveyancing Law Reform Act 2009 — but this prohibition does not apply to leases signed before that date, which are still common in the Irish commercial market.
How Is the Open Market Rent Determined?
On a rent review, the lease will specify how the new rent is to be determined. This is typically the “open market rent” — what a willing tenant would pay a willing landlord for the premises in the open market, on the review date, on the terms of the lease (with certain standard assumptions and disregards). Key points: any improvements you have made to the property at your own cost are typically disregarded; the fact that you are in occupation is typically disregarded; your goodwill is not taken into account.
The Review Process
- Trigger notice: The landlord (or tenant, depending on the lease) serves a rent review notice triggering the process
- Negotiation: The parties attempt to agree the new rent between themselves, usually with the assistance of valuers
- Dispute resolution: If the parties cannot agree, the lease will specify how the dispute is resolved — typically by an independent expert (who makes a determination that is binding on both parties) or by arbitration under the Arbitration Act 2010
- Time of the essence: Check whether the lease makes the notice period “time of the essence” — failure to serve a notice on time can sometimes result in the review being treated as settled at the passing rent
Practical Tips for Tenants
- Instruct a commercial property valuer as soon as a rent review notice is served — do not try to negotiate directly without professional support
- Check the review assumptions and disregards carefully — these significantly affect the outcome
- Review comparable evidence (recent lettings of similar properties in the area) to support your position
- Do not assume the landlord’s valuer’s figure is correct — always get your own independent valuation
- Get legal advice on whether time of the essence provisions apply
Facing a rent review? Book a 30-minute consultation with one of our commercial property solicitors. Also see our commercial lease guide and Commercial Lease Review service.
This article is for informational purposes only and does not constitute legal advice.
