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Irish government caves in to landowning interest

The Irish government has scrapped plans to pass a law that would have enabled commercial tenants to remove upward-only rent review clauses from their leases. Ireland’s minister for finance said in his 2012 budget speech that it was not possible to develop a scheme to tackle the issue that would not be vulnerable to legal challenge or compensation claims from landlords.

In the boom years of the Celtic Tiger economy tens of thousands of retailers agreed to leases where rents would be reviewed upwards every few years without any possibility of reductions.


Retail Excellence Ireland, a lobby retail group, said the government had shown “utter contempt” for retailers by abandoning the proposed reforms. “The retail industry has lost 50,000 jobs in the past four years. The continuance of upward-only rent reviews will greatly increase this number,” it said in a statement.

The Irish budget incorporates a package of austerity measures. But the landowning interest must be spared any pain even if it means prolonging the recession by damaging business; thus the budget also incorporates a package of measures designed to pump up the Irish property bubble again, including an increase in mortgage interest relief.

We thought that the free market was about allowing prices go down as well as up, but seemingly the land market considers that it needs to be protected from normal market forces at the expense of the public at large and the business community in particular. But it is worse than that. Why, we must ask, would landlords prefer to risk bankrupting their tenants and getting no rent at all, rather than accept the going rate and assuring themselves a steady income?

First Class passengers must eat caviare on best bone china

If the response of politicians round the world can be compared to rearranging the deckchairs on the Titanic, this decision is more like making sure that the passengers in the liner’s First Class restaurant continue to get only the best Beluga caviar, served on the best bone china.

See full article in FT here