Sunday 25 February 2018

Landlords are urged to keep on top of their rents

More landlords will lose retail tenants this year due to a number of factors.

"NAMA and the receivers are moving in and will have little or no patience. The tenant brand name means little and, with examinerships putting landlords at the back of the creditors queue, it is more important than ever for landlords to manage their tenant relationships and keep on top of their rent payments."

This warning came from John Hogan, partner at Lemans solicitors at a recent breakfast seminar. "The courts are now recognising the collapse in retail rents on Grafton Street," he added and cited two recent Circuit Court cases, Burger King and Celtic Jewellers, which secured rent reductions of 53pc from the peak rents they were paying.

"In both cases the landlords were forced to court by the tenants exercising their technical lease entitlements. Not every tenant will have the same rights."

Speaking at a seminar hosted jointly by his firm and Knight Frank Ireland, Mr Hogan said a change of government will increase the pressure for pro-tenant legislation.

He said that, "the courts are clearly showing that they have no sympathy for Celtic tiger rent demands."

Keiron Diamond, director and head of retail Knight Frank Ireland, said that mutual understanding of problems facing both landlords and tenants is vital.

He pointed out the need for flexibility in reviewing rents and making downwards adjustments as necessary and told his audience that he has successfully renegotiated rents downwards for a wide selection of retailers.

While outlining the growth of turnover rents, he advised that these would not suit all retailers or landlords and required trust between the parties.

Mr Diamond said the banks are also playing a key role in facilitating renegotiated rents and he also spoke on the effect that the abolition of upwards- only rent reviews on new leases has had on the market, with the reality of a two-tier leasehold interest market and the importance of tenants understanding the rent review process.

John Mockler, managing director of Knight Frank Management Ireland, stressed the importance of proactive property asset management in the redefined landlord and tenant relationship that now exists.

"Businesses are ever more mindful of their total property costs including rent, service charges, insurance and rates, and seeking ways of reducing their overall costs of occupation", he said.

"Landlords of shopping centres and other commercial buildings face the ongoing challenge of maintaining the proper operation of these properties, while they remain part or substantially empty. Cash-flow from service charges is vital to enable payment to service providers of security, cleaning, maintenance and so on, and landlords are likely to be obliged to contribute to the service charges for vacant units from rental income."

Irish Independent

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