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Commercial rent review

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  • 18-03-2015 8:18pm
    #1
    beepbeeprichie
    Registered Users Posts: 57 ✭✭


    Hi there,
    I started a lease in 2006 at 19k. 18 months later it increased to 40k. I was shocked but times were still good so I didn't have much choice but to go along with it. Then a few months later recession hit and we eventually got them to reduce it to 25k where it's been ever since. But now the landlord is back looking for 40k.
    I'm still in no position to pay that as business is still such a struggle, I'm operating on a week to week basis scraping by.
    Landlord is an elderly lady. Landlord came to me and said that she needs to increase it as she is struggling and it's her only income. Am I right in saying that in a rent review her personal circumstances can't affect the review?
    Also, she originally leased the building to a couple. The couple extended the building out to the rear yard. Am I right in saying that the improvements made to the building shouldn't have been taken into consideration for the rent review? Can a landlord count a rear yard in your commercial properties square footage?
    If this is the case could it be possible thatmy rent review could be deemed void?
    Thanks for any advice, much appreciated


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    #2
    Victor
    Registered Users Posts: 78,247 ✭✭✭✭Victor


    You should shop around and see what similar properties are going for. You should strongly consider whether to employ someone on your side to consider the rent review.

    Do you have the option of giving up the lease and moving?
    beepbeeprichie wrote: »
    I'm still in no position to pay that as business is still such a struggle, I'm operating on a week to week basis scraping by.

    ..

    Am I right in saying that in a rent review her personal circumstances can't affect the review?
    Both of these can be seen as emotional pleas. Neither of these are directly relevant to the legalities of the rent review. However, the do affect the practicalities.
    The couple extended the building out to the rear yard. Am I right in saying that the improvements made to the building shouldn't have been taken into consideration for the rent review?
    That will depend.
    Can a landlord count a rear yard in your commercial properties square footage?
    In the headline calculation, no. But you do have use of the (former) yard.


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    #3
    Sleeper12
    Registered Users Posts: 16,881 ✭✭✭✭Sleeper12


    The answer to most of those questions are in the lease that you signed in 2006.
    During a rent review the landlord is entitled to the current market value. You are entitled to get your own valuation and it will go to arbitration if you can't agree.
    A landlord can't just increase the rent whenever they want. It will say in your lease when it can be reviewed.
    I strongly suggest that bring your lease to a solicitor for real advice. I can't see how anyone here can advise you without reading the whole lease.


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    #4
    ebbsy
    Registered Users Posts: 6,737 ✭✭✭ebbsy


    A rent review can only take place at a particular time, as specified on the lease,

    Her personal circumstances d'ont come into it, if it goes to arbitration it will boil down to market value of similar properties and nothing else.

    Make sure you do proper research in this regard, things certainly are not what they were in 2006.


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    #5
    beepbeeprichie
    Registered Users Posts: 57 ✭✭beepbeeprichie


    Thank you for the quick replies,
    Unfortunately this isn't a proper rent review. Landlord is looking to revert to the bloated figure agreed year's ago so I am not sure if I can treat it as though it's review time. My main problem is that a well known coffee chain moved in next door before the recession and agreed a ridiculous rent. They got a small reduction butnothing to shout about. There are many other properties around us that have decent rents.


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    #6
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭davo10


    OP the ll is entitled to increase rent provided the lease you signed is not a term lease at a certain rent for a specified period. If the original lease was for 19k with options to increase rent. she is entitled to revert to the original agreed rental. Her personal circumstances are not relevant, but then again, neither are yours. The market rate certainly applies to residential tenancies but may not be relevant to commercial tenancies as there are a lot more variables such as size/location/footfall etc. You will need to get legal advice but I suspect that if the tenancy agreement was for €40k and the reduction was agreed as a temporary concession, she is entitled to revert to the original amount as it is what you agreed to when signing tenancy agreement. If she is able to use the coffee shop next door as an indicator of current rent rate then you could have little option but to agree to it or move.


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    #7
    ebbsy
    Registered Users Posts: 6,737 ✭✭✭ebbsy


    Think OP needs professional advice.


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    #8
    beepbeeprichie
    Registered Users Posts: 57 ✭✭beepbeeprichie


    Thanks again for your responses. I will seek pro advice. My unit is only 60 square metres, 40k is ludicrous in these times


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    #9
    beepbeeprichie
    Registered Users Posts: 57 ✭✭beepbeeprichie


    Thanks again for your responses. I will seek pro advice. My unit is only 60 square metres, 40k is ludicrous in these times


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    #10
    jimmii
    Registered Users Posts: 14,810 ✭✭✭✭jimmii


    40k for 60sqm sounds insane! I have a 200sqm unit and its bit less than that!

    Definitely seems like you're going to need to go to a professional to sort this out seems too big a gap to sort between yourselvs.


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    #11
    davo10
    Closed Accounts Posts: 6,926 ✭✭✭davo10


    jimmii wrote: »
    40k for 60sqm sounds insane! I have a 200sqm unit and its bit less than that!

    Definitely seems like you're going to need to go to a professional to sort this out seems too big a gap to sort between yourselvs.

    Location location location, 60sqm of commercial property with frontage on a street with high footfall is a different proposition to a 200sqm industrial unit off some side street with low footfall. A shop in Dublin is different from a shop in Cavan. And a 60sqm commercial unit may attract a significantly lower commercial rates bill than a 200sqm one. What you said is like saying a smaller house in a city with high demand should be cheaper than a larger house in an area where there might be low demand. It's apples and oranges.


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    #12
    jimmii
    Registered Users Posts: 14,810 ✭✭✭✭jimmii


    davo10 wrote: »
    Location location location, 60sqm of commercial property with frontage on a street with high footfall is a different proposition to a 200sqm industrial unit off some side street with low footfall. A shop in Dublin is different from a shop in Cavan. And a 60sqm commercial unit may attract a significantly lower commercial rates bill than a 200sqm one. What you said is like saying a smaller house in a city with high demand should be cheaper than a larger house in an area where there might be low demand. It's apples and oranges.

    My shop is in Dublin City centre guessing its a fairly similar type of apple. I agree it totally depends on the footfall if this is in a 1k+/hour (ours is in a 400-600/hour area) then it sounds more reasonable presumably if a well known coffee chain moved in then the footfall there must be pretty decent.


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    #13
    beepbeeprichie
    Registered Users Posts: 57 ✭✭beepbeeprichie


    hi again,
    quick question...is there a certain cap on how much your rent can increase in one go? a solicitor said he thinks there is only a certain percentage they can increase it by?
    cant find any information online about it. if you are renting a house or apartment you get so many rights but with commercial you dont seem to get many??
    thanks!


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    #14
    Cuddlesworth
    Registered Users Posts: 13,980 ✭✭✭✭Cuddlesworth


    beepbeeprichie wrote: »
    hi again,
    quick question...is there a certain cap on how much your rent can increase in one go? a solicitor said he thinks there is only a certain percentage they can increase it by?
    cant find any information online about it. if you are renting a house or apartment you get so many rights but with commercial you dont seem to get many??
    thanks!

    I'd get a new solicitor.


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    #15
    Sleeper12
    Registered Users Posts: 16,881 ✭✭✭✭Sleeper12


    Cuddlesworth wrote:
    I'd get a new solicitor.


    I totally agree.

    It says in your lease the landlord is allowed increase the rent to the current market value. There is no maximum percentage. The current market value is the current market value. The solicitor should know this and he/she should definitely be able to read this in the lease.


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    #16
    beepbeeprichie
    Registered Users Posts: 57 ✭✭beepbeeprichie


    Oh well. It's not my solicitor, just a guy in the area... Always thought he was a Wally!


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