Publication of the Commercial Lease Database a step in the right direction
THE publication of the Commercial Lease Database earlier this week will bring much-needed transparency to the commercial property market, but it will require full co-operation from tenants to ensure its sustainability in the longer term.
In September 2012, the Residential Property Price Register (RPPR) was launched by the Property Services Regulatory Authority (PSRA) – the agency responsible for the statutory licensing and regulation of estate, property management and letting agents.
This register, while having some limitations, has significantly improved transparency in the residential market.
In the commercial property market, the introduction of the Commercial Lease Database, which is far more comprehensive than the Residential Property Price Register, will equip tenants and landlords with important information in relation to rents and lease agreements since January 1, 2010, which heretofore, was not publicly available.
A limited amount of information, including the address of the property, date the lease commences, the average annual rent and duration of the lease, is available for free from www.psr.ie.
For a €10 fee, more detailed information including any capital contributions paid, the frequency of rent reviews, liabilities for rates, insurance, service charges, break clauses and particulars of rent free periods and fit-out allowances is included.
The availability of such data will empower both landlords and tenants to reach a commercially informed decision when negotiating new leases, dealing with rent reviews and lease restructuring and renewals.
The database and resulting transparency is also likely to assist with attracting international investment, which is key to our economic recovery.
This year is expected to be one of the best years for commercial property since 2007, with projected total investment expected to exceed €1.5bn, up from €557m in 2012, and the database will give additional confidence to international investors.
The database will also assist with the rent review process. One of the key recommendations of the 2010 report of the Working Group on Transparency in Commercial Rent Reviews, on which representatives of the Society of Chartered Surveyors Ireland (SCSI) participated, was to publish the database in order to address the information deficit in this area.
The group was of the view that the database would put all parties to a rent review dispute on an equal footing by ensuring that they are privy to all relevant information regarding property comparisons that may be advanced in order to make the case for a particular rent level.
The longer-term success of the database, however, will be determined by the level of information provided by tenants to the PSRA.
Under the 2011 act there is a statutory requirement on tenants, not landlords, to provide that critical data and it appears that there is a lag in the provision of this information.
The PSRA has attempted to address this by writing to 8,000 tenants and their representatives seeking compliance with their statutory duty to file a lease transaction return containing all of the relevant information within 30 days of the lease agreement being signed.
It is imperative that all tenants who have not yet completed the Commercial Lease Return do so as soon as possible to ensure that the database can operate as intended as a useful and comprehensive source of data for the market.
The lack of supply of certain types of commercial property remains a key issue for foreign direct investment and the more available data that can lead to informed decision making when it comes to development, planning and investment, the more sustainable and competitive the sector will be in the long term, which is in everyone's interests.
Eamonn Maguire is a Chartered Surveyor and Chair of the Commercial Agency Professional Group of the Society of Chartered Surveyors Ireland www.scsi.ie.
The Commercial Lease Database can be accessed from the Property Services Regulatory Authority (PSRA) website www.psr.ie