UK - Possible law banning "upward only" rent reviews in property leases could have a negative impact on pension funds' investments, effecting the long-term savings of millions of individuals, says the National Association of Pension Funds (NAPF).
The government is consulting businesses and investors on possible legislation outlawing the use of “upward only” rent review clauses.
“Property is an important diversifying asset for pension funds,” said NAPF chief executive Christine Farnish (pictured).
“One of its great strengths is the security of the income flow. Removing this security through legislation would undermine the asset class and damage property values. This would be yet another attack on pension fund savers.”
The NAPF has submitted a response to the government’s consultation paper opposing the change.
“We have explained in our response that strong evidence exists to demonstrate that flexible leasing is now commonplace in the property market. We believe the current free market, which provides choice to the advantage of both parties, operates perfectly well for landlords and tenants and that any change would have unforeseeable and detrimental consequences for both,” Farnish said.
She added: “I sincerely hope that common sense will prevail and so avoid at least this particular risk of damaging pension funds.”
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