This article is reviewed and approved by Peter O’Connor & Son LLP
In plain terms, a commercial rent review is the moment written into a business lease when the rent is revisited, while the rest of the agreement stays the same. The aim is to keep the rent broadly in step with the property market over a long lease. Think of it as a scheduled check on price rather than a fresh negotiation of the whole deal.
Why commercial leases include one
Business leases often run for ten, fifteen or twenty years. Holding a single rent steady for that long would leave one side out of pocket as the market moved. The rent review clause is the compromise. The rent holds between reviews, then resets at agreed intervals, most often every five years.
What reviewing the rent actually means
Reviewing the rent means recalculating it by a method the lease picked in advance, not by whatever either party fancies on the day. The usual yardstick is the open market: what a comparable unit in a comparable spot would let for now. Other leases tie the figure to an agreed index or to increases fixed when the lease was signed. The wording of your clause decides which of these applies.
A review is usually set in motion by the landlord serving a notice, after which both sides, often working through surveyors, aim to settle on a figure. Where they cannot, the lease will name a route to break the deadlock, typically an independent expert or arbitrator.
The one thing every tenant should check
The key question is which way the rent can move, and that turns on the date of your lease. Leases granted from 28 February 2010 onwards fall under section 132 of the Land and Conveyancing Law Reform Act 2009, which stops the rent being locked on an upward-only footing. Under those leases, a review can lower the rent as well as raise it. Leases signed before that date may still be upward-only. Knowing which side of the line your lease sits on tells you whether a review is a risk or a chance to save.
Rent review is not the same as lease renewal
These two are easy to mix up. A rent review adjusts only the rent, partway through a lease that continues on its existing terms. A lease renewal is a separate event at the end of the term, where a new lease and new terms are put in place. They run to different rules and different timelines, so it helps to be clear which one you are dealing with.
For a deeper look at how rent reviews work in practice, see our guide: Commercial rent reviews in Ireland: what business tenants and landlords need to know
Get your clause explained
That is the term in a nutshell: a built-in reset of the rent, on a set cycle, by a set method. What it means for your business comes down to the wording of your own clause and the year you signed.
If you would like your rent review clause explained or a review notice looked over, contact Peter O’Connor & Son today. We advise tenants and landlords on commercial leases throughout Ireland.