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The Irish government has dropped plans to ban upward-only rent reviews for existing leases. The u-turn on rent review reform was announced in an austerity budget introduced by the ruling government coalition this week.

Property consultant CBRE welcomed the move. Marie Hunt, executive director at CBRE, Dublin, said: 'We broadly welcome the confirmation from Government that they now no longer intend implementing retrospective legislation with regard to rent review provisions in business leases. This was clearly the single biggest obstacle to transactional activity in the investment sector of the market over the last 12 months and we are happy that this has been cleared up today. The removal of this uncertainly along with the reduction in stamp duty for commercial property and capital gains tax changes for properties purchased over the next two years will enable transactional activity to resume in this sector of the economy'.

While acknowledging the difficult task facing the Irish Government in rectifying the country's public finances, the property consultants expressed disappointment that the budget measures are unlikely to stimulate job creation or boost economic growth to any significant degree. They were particularly critical of the decision to increase the rate of VAT from 21% to 23%, a measure they say will put further undue pressure on the retail sector of the economy. The property consultants were, however, encouraged to hear the Minister re-state the Government’s commitment to retaining the corporate tax rate of 12.5%, which they say is critical to the retention and expansion of multi-national corporations, who provide much needed employment in the economy.

Another measure announced in the budget which will have significant implications for the property sector is the reduction in the rate of stamp duty on commercial property purchases from 6% to 2%. CBRE welcomed the reduction.