UK: Third Time Lucky. The Code For Leasing Business Premises In England And Wales 2007

Last Updated: 15 June 2008
Article by Greg Thwaites

On the March 28, 2007 the Code for Leasing Business Premises in England and Wales 2007 ("the Code") was formally launched by Yvette Cooper, the Minister for Housing and Planning.

The Code aims to bring more equality into the landlord and tenant relationship and is "to be used as a checklist for negotiations before the grant of a lease and lease renewals."

This is the government's third bite at this particular cherry having previously failed to woo the industry with the Code of Practice for Commercial Leases 1995 and then the Code of Practice for Commercial Leases 2002.

This time around, however, it is prudent to proceed on the basis that the government will make good on their threat that "if the market does not deliver, we have identified legislative options".

The Code itself is broken down into 10 key areas of Lease Negotiations, Rent Deposits and Guarantees, Length of Term, Break Clauses and Renewal Rights, Rent Review, Assignment and Subletting, Service Charges, Repairs, Alterations and Change of Use, Insurance, Ongoing Management.

The provisions of the Code are too lengthy to set out here in full, however, certain of the provision are worthy of comment:

Length Of Term Break Rights And Renewal Rights

The Code provides that the only pre-condition of a break right should be that the main rent is up to date, that the tenant gives up occupation and that there are no continuing subleases.

Landlord resistance to this provision is anticipated as while it is usual for a tenant's solicitor to press to limit conditionality (if possible completely excluding the requirement that lease terms are complied with) the Code goes further still by referring only to the payment of the "main rent" and to giving up "occupation" rather than requiring the tenant to provide "vacant possession." The Code leaves items such as service charge disputes and clearing the premises to be dealt with as contractual disputes following the determination of the lease.

Rent Review

The Code provides that landlords shall on request offer alternative methods of review. Where a landlord is unable to offer an alternative method of review they shall give reasons.

We anticipate resistance to any method of review which is likely to result in the tenant paying less rent following a review.

In addition, where the premises form part of an estate or is part of an existing building it is unlikely that the landlord would wish to review parts of the building or estate on anything other than a uniform basis. This in itself would make an alternative method of review unattractive to a landlord of a multi-let building or estate.

Assignment And Subletting

The Code states that (save in respect of certain specified circumstances relating to an assignment within the same group) the lease shall not to refer to any specific circumstances for refusal of consent to an assignment.

In addition, the Code provides that an Authorised Guarantee Agreement ("AGA") shall not be required as a condition of assignment unless the assignee is either of a lower financial standing than the assignor or is resident or registered overseas, while for smaller tenants a rent deposit shall be acceptable as an alternative to an AGA.

These provisions of the Code represent a significant departure from the norm. A landlord will usually press to have a prescribed (but non-exhaustive) set of terms upon which it can refuse consent. This provides a greater level of certainty and limits the scope for dispute.

In addition, a landlord will usually press for a requirement that every assignor shall provide an AGA for their assignee. Accordingly, the requirement that an AGA may only be available in limited circumstances will be seen a shift in favour of the tenant.


Unless the Heads of Terms specifically stipulates otherwise the Code states that the tenant shall only be required to keep the premises in the same condition as at the date of the lease.

This turns on its head the current convention that unless the Heads state otherwise the tenant shall keep the premises in good and substantial repair.

While this may seem fair in short term leases (i.e. 5 years or less) we expect landlords to resist such a provision in longer term leases.

Alterations And Changes To Use

The Code states that prohibitions in respect of alterations and changes of use shall not be more restrictive than is necessary to protect both the value of the premises and the value of the landlord's adjoining premises. Further, internal alterations shall be notified to the landlord but provided that they do not affect services or systems of the building they shall not require consent.

This is a considerable relaxation of the current position which leaves the door open for the tenant to make structural alterations to the premises. Currently, this is usually absolutely prohibited save in long term leases.

In addition, a relaxed user clause may mean that the tenant can change the use of the premises to their benefit while the landlord is unable to share in this benefit by way of an increased rent until the next rent review.


The Code provides that rent suspension shall apply where the premises are damaged by an uninsured risk other than where this is caused by a deliberate act of the tenant.

Traditionally, rent suspension arising from uninsured risks has been at the tenant's risk but landlords are increasingly willing to carry this risk.


The Code could put landlord and tenant relationships on a more equal footing but in the short term we believe it unlikely that landlords will embrace the Code. To achieve its goals, the government will almost certainly have to carry through its threat to introduce legislation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions