The Irish Government has scrapped plans to ban upward-only rent review clauses from existing leases.
In his budget speech on Tuesday, Ireland’s minister for finance Michael Noonan said it was impossible to develop a scheme that would not have been vulnerable to a legal challenge.
He also revealed that VAT would rise from 21% to 23%.
After fierce lobbying by retailers the former Irish Government banned upward-only rent reviews last year on all leases signed since the end of February 2010.
Before being voted in, the present Government had said during the election campaign it would go further, and introduce legislation to ban upward only rent reviews in leases signed before this date. It has now scrapped these plans.
It is thought property owners had put pressure on Government to abolish the plans.
Critics of upward only rent reviews have blamed the clause for the closure of many businesses that could not survive under the burden of heavy rental costs.
Retail Excellence Ireland (REI) said the Government’s decision will cost thousands of retail jobs.
REI chief executive David Fitzsimons said: “Ministers Alan Shatter and Michael Noonan have shown utter contempt for Irish retailers and Irish retail jobs by abandoning their reform of upward only rent reviews.
“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.”
He said that up until last week the Government had said it would publish the legislation in the New Year.