On Thursday May 27 the Government published its eagerly-awaited consultation paper on upwards-only rent reviews, confidentiality clauses and dispute-resolution procedures. The document lists a range of options for each area and decisions on new legislation will hinge on the outcome of the consultation process.
Speaking last weekend, Under-Secretary of State for the Environment Tony Baldry anticipated the paper iin a debate on “The future of Britain’s High Streets”, indicating that the Government is reluctant to introduce wide-reaching changes.
The Property Market Reform Group lent its support to the conference, which was organised by the Conservative Political Centre, and PMRG joint chairman Ian Oliver commented: “We would have been very surprised if we had had a positive response, but each time we meet Mr Baldry his reaction is milder and more understanding than before.”
On future reforms, Baldry stated: “Any effort spent in speculation about retrospective commencement will be entirely wasted.
“Many of the problems highlighted by the PMRG relate to the terms of a private contract . . . It is for the individual landlord and tenant to negotiate at the outset whether such terms are included in the lease.”
Turning specifically to upwards-only rent reviews, Baldry said: “These have been part of the property scene for many years. From the landlord’s point of view they have assisted in attracting funding for development and provided a level of secure income . . . This has increased the supply of suitable property, which will tend to reduce rental levels.”
Oliver illustrated his case against upwards-only reviews with an example of a shop rent rising from £50,000 pa in 1985 to £125,000 pa in 1990. “The property was the same, the landlord was the same, the turnover in 1990 was the same as in 1989. Where was the sense, where was the economic logic, where the equity? And let me state again – no right of appeal, no ombudsman, no Office of Fair Trading.”
