Background
Bewley’s Café Grafton Street Limited (“Bewleys”) have been operating from the iconic building on Grafton Street, Dublin for a significant number of years and have been involved in an on-going dispute with its’ Landlord, RGRE Grafton Limited (“RGRE”) regarding the rent payable per annum.
Bewleys’ 1987 lease expired in August 2022. Under the expired lease, the rent payable was reviewed on an upwards only basis. Prior to the expiry of the 1987 lease, Bewleys made an application for a new lease pursuant to Section 20 of the Landlord and Tenant (Amendment) Act 1980 and elected to take a five year term. The matter that the Circuit Court was recently required to determine was the rent payable under the new lease.
Decision
The Circuit Court decision of the 25th October 2024 determined the rent payable under Bewleys new lease (dating back to August 2022) to be approximately €738,000 per annum. This reflects an approximate 50% reduction in the rent that was payable per annum pursuant to the expired lease.
In reaching the determination, the Circuit Court accepted the zoning method of valuation in determining the rent payable for commercial premises to be industry standard where typically the front zone of the ground floor would attract more rent than the rear. The Court however determined it would place greater weight on new open market lettings as opposed to closed rent reviews as it was considered to be a more likely indicator of what a willing tenant would pay and what a willing landlord might accept for the premises. The Court did provide an uplift for the area to the rear of the ground floor of the Bewleys premises noting its restaurant use.
Significance of the Decision
This decision provides clarity to what the Court will consider in rent determinations and the importance of having evidence of current rental values on the renewal of a lease. It is also a reminder to Landlords that on expiry of a lease where a tenant has been in occupation for five years or more, the tenant can go to the Courts to determine the terms of the new lease.
