Political party clubs must pay landlords 5% cut from bars

Clubs registered with the police will start paying a new rent regulated by new rules for premises with pre-1995 leases.

The laws will affect political party clubs renting old rent-controlled properties, which will now also have to give landlords a 5% cut of the income generated from bar sales.

Clubs’ rents will increase by a fixed 10% rate over the previous year, every year up until 2016.

After 1 January, 2016, the rent will increase by 5% over 2016, and at the same rate every year up until 2023.

Clubs’ rents will then increase every year according to the index of inflation for the previous year.

If the clubs in question however generate income through some form of economic activity carried out on the premises, as from 1 January, 2015 the tenants will have to pay their landlords 5% of the income generated – mainly from bar sales, restaurant receipts, sub-leasing or any such management agreements.

The change in rent laws stems from a recent landmark judgement handed down by the Constitutional Court in a case by property owner Sean Bradshaw, who complained that his Republic Street property – occupied by a band club – had had its €1,165 (Lm500) annual rent frozen under rent-control laws.

Bradshaw complained that amendments to the rent laws in 2005 had deliberately left out clubs, which remained regulated by old protectionist laws, and that the omission was made in view of the particular historic and social role rendered by clubs such as sports clubs, band clubs, political clubs and others.

In its decision the Constitutional Court took note of the estimated rental values submitted by both parties, which while far apart were both significantly higher than the actual rent, commenting that this alone was to the detriment of the landlord.

It also took note of the parliamentary debate on the rent laws amendments, where it was ironically acknowledged that it would be unfair to retain the old protection of club leases, and expect the landlord to suffer the burden alone in the name of public interest.

The court decided that the fairest way to level the imbalance was by awarding the owners compensation of €300,000, to be paid equally by the state and the tenant.