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16 I Why Ireland? A guide to doing business in Ireland I ByrneWallacenegative covenants on the part ofthe tenant including: the obligationto pay rent; maintain and repair thepremises; limitations on the permitteduse; restrictions on alienation andalterations; agreement on the conditionto which the premises must be restoredon determination of the lease.Rents and Service ChargesRental levels have fallen in recentyears and rents are negotiated andagreed by real estate agents. Turnoverrents are increasingly prevalent inhigh-turnover retail locations. Inmulti-occupied developments servicecharge and insurance contribution aretypically payable in addition to rent andcalculated on a pro-rata basis.Rent ReviewSince the 1960’s practically every Irishcommercial lease for a term in excessof five years contained a five yearly“upwards only” rent review clause.Such clauses provided that the rent firstreserved would be reviewed every fiveyears to the higher of the rent payableimmediately before the review or theopen market rent at the date of thereview.Section 132 of the Land andConveyancing Act 2009 providesthat rent review clauses in leasesgranted after the 28 February 2010be interpreted as reviewing rents toopen market value introducing thepossibility of downward movement onreview for the first time in many years.The provision is not retrospective in asmuch as it does not apply to existingarrangements on that date, thuscreating a two tier system. Green Leases– landlords and tenants are increasinglyfocussed on commitments towardsenergy efficiency, carbon reduction, useof renewable energy, waste reductionand water use reduction as the cost ofsuch items escalates and it would not beunusual to see leases addressing theseissues.TAXATIONStamp DutyA tax on deeds and instruments, StampDuty is payable by the purchaser ofproperty on the purchase price of theproperty. The top rate of Stamp Duty oncommercial property is currently six percent of the consideration paid or themarket value whichever is higher. StampDuty is also payable on occupationalleases by the tenant at a rate of onepercent of the annual rent.Value Added Tax (VAT)In certain circumstances VAT is payablewhen purchasing property and is alsocharged in many cases on rents payablepursuant to commercial leases. TheVAT regime was extensively overhauledin 2008. Where chargeable on anacquisition the current relevant rate ofVAT is 13.5% of the purchase price.Whether or not VAT is chargeable willdepend on the age of the property,whether it has been developed orredeveloped (as defined in the VATActs) and the use to which it is put. Inrelation to commercial rents, if thelandlord “opts to tax” the Lease thenVAT is payable at the current rate of 23%on the rents payable. It is unusual fora landlord not to opt to tax as he mostlikely will have reclaimed VAT in thecourse of development giving rise to apotential claw back if he does not opt totax. VAT registered entities can reclaimVAT paid and it is important for any newenterprise to process its VAT registrationin a timely fashion.PLANNING ANDENVIRONMENTALPlanning Permission is requiredbefore buildings can be constructed,significantly altered or the use of samechanged. Applications are made to therelevant Local Authority with a right ofappeal to An Bord Pleanala (the appealsboard). A planning application is apublic process affording members of thepublic a right to make observations andobjections. Planning Permission will takeat least three months to procure; howeverthis process can take significantly longerif there is a third party objection and/oran appeal or review.Each Local Authority is required to devisea Development Plan at regular intervalsin which areas are zoned for particularuses to facilitate the orderly developmentof regions and ensure that adequateinfrastructure is available to support suchdevelopment. Planning Permissions mustbe in accordance with the DevelopmentPlan.All works (including internal nonstructuralworks) must be carried out inaccordance with the Building Regulationswhich regularise construction standards,energy efficiency, fire safety requirementsand disabled access to premises amongstother matters.EU legislationAn extensive and ever-increasingnumber of EU directives now form partof Irish domestic law. The EnvironmentalProtection Agency of Ireland (EPA),the Department of the Environmentand Local Authorities all play a role insanctioning and controlling activitieslikely to impact on the environmentthrough assessment of environmentalimpact statements, planning conditionsand IPC licences.