Updated
code leasing business premises
British Property Federation - New code to clear leasing minefield
A consortium of business, property, finance and legal
organisations today publishes the updated Code for Leasing
Business Premises. The easy to follow guide will help ensure
that businesses avoid the possible pitfalls of lease agreements
and that landlords operate to a pan-industry agreed standard.
The government endorsed code will be unveiled by communities
minister Yvette Cooper today, with a number of radical changes
from the 2002 edition. These include:
• Landlords should on
request price alternative rent review terms on a risk- adjusted
basis, rather than providing a menu.
• Preconditions on break
clauses are significantly restricted.
• If subletting is allowed,
it should be at the market rent.
• At the time of negotiating
the lease landlords must disclose known irregular events that
would have a significant impact on the amount of futureservice
charges.
• Unless expressly stated in
the heads of terms, tenants should only be obliged to give the
premises back at the end of their lease in the same condition as
they were in at its grant.
The new code offers three documents to improve leasing practice:
• a far more focussed and
therefore succinct two-page landlords' code;
• a step-by-step guide for
tenants;
• a heads of terms
checklist, which all parties and their agents and solicitors can
use during lease negotiations.
It will be of particular help to small businesses, highlighting
both the opportunities and problems of commercial leases. It
will also ensuring that landlords, particularly small landlords,
follow the best practice agreed across the industry.
Commenting on the launch, Philip Freedman CBE, chairman of the
Code Steering Group, said:
"Hundreds of hours have gone into the production of these three
documents, but it will be all for nothing if we do not get them
into the right hands at the right time. I strongly therefore
urge prospective tenants, their agents, solicitors, bankers and
accountants to ask for code compliancy when negotiating a lease,
and landlords and their representatives to volunteer it.
"The Code remains voluntary, but several organisations will be
taking steps to embed it within their self-regulatory
structures. This third edition represents a wake up call:
tenants, particularly, SMEs, should ensure they are better
informed about leases they are considering; and, landlords
should ensure that they are providing terms which are
transparent and fair."
Email: ateacher@bpf.org.uk