The severe economic recession we are currently experiencing has led to many informal rent reductions in the interest of maintaining a tenant instead of having a premises idle.
The recently passed Land Law and Conveyancing Law Reform Act 2009 ends the practice of upwards only rent review clauses in all commercial leases. The Act came into force in December 2009. The change will not apply to existing commercial leases but will help new tenants.
This introduces a new element in negotiating terms of new leases.
Rent reviews will now be linked to market conditions. If market conditions worsen, the rent will follow.
This makes more sense for businesses planning for the future and can be considered business friendly. It is a measure of the severity of the current recession that the Government was galvanised into action on this issue.
