EARLIER this year, the Irish Government abolished upward-only rent reviews because it felt that the system was unfair.

There are calls for the same to happen in the UK.

The rental market has been protected by businesses reluctant to purchase new premises and by unfair bias of rent reviews.

Common practice dictates that commercial tenants are subject to a rent review after an agreed period.

Normally, these are on a three or five year basis.

Invariably reviews are upward only, meaning that rent a tenant pays will rise or stay the same.

These prejudice tenants tied into existing contracts which seems unfair, given the current state of the market.

Tenants who entered into agreements or had a rent review before the credit crunch would have done so when the market was at its peak.

Values have fallen dramatically, alongside consumer spending power, which means that new tenants can secure much lower rental values and often receive huge incentives from landlords to sign up to premises, including fit-out deals, attractive break clauses and rent-free periods.

Rent reviews are designed to protect the landlord’s position in the lease contract, seeking to increase the rent at regular intervals to take inflation into account.

The new figure should also reflect the value of the property on the open market, even for pre-credit crunch leases.

The vast majority of agreements state that a review cannot lead to a decrease in rent.

Some would argue that landlords need this provision to remove an element of investment risk, and that a change would add to the existing burden of empty rates liabilities.

However, sentiment among occupiers has moved against landlords, with many citing the introduction of an optional code of practice in 2007.

They say this was the industry’s chance to tackle the issue without the introduction of legislation.

Unless the law changes, landlords should prepare to expect tenants to attempt to strike a harder bargain while there is over-supply, and until the market recovers.