Landlords be warned! Continue to ignore the Code for Leasing
Business Premises 2007 and this voluntary Code and “self
regulation” could well be replaced by statute very
soon. Chris Dixon, senior associate in the Commercial
Property team, looks at what Landlords need to consider:
The hope was that the 2007 Code would be used as a
“checklist for negotiation” before the grant of a lease
and on lease renewals. It was also hoped that landlords would
be “transparent” about departures from the Code and
their reasons for doing so. The Code was intended to achieve:
- a fairer balance between the landlord and tenant and
- greater flexibility in commercial lease terms.
It was the result of a “pan industry” discussion
between representatives of landlords, tenants and the
Government.
Unfortunately whilst good intentioned, the 2007 Code, like its two
predecessors, seems to continue to have limited impact on the
market. Precedent “Code compliant” leases are
available to use but it seems that landlords continue to have their
own standard form of leases which only comply with certain limited
elements of the Code, if at all.
Uptake might be slowly improving but key areas remain where
compliance with the Code is weak, for example rent review
provisions (with upwards only rent reviews still the norm),
insurance (with “uninsured risks” rarely taken into
consideration, particularly in first drafts), break clauses, repair
and reinstatement - the result is leases which are frequently more
onerous than the Code and the Government believe they should
be.
Landlords and their agents would be well advised, with our help, to
consider amending their leases and letting terms to adopt the Code
before it’s too late. Government monitoring of business
leases continues - whilst Government’s desire to minimise
“red tape” remains, perhaps legislation to impose some
of the Code requirements will be delayed but as the state of the
economy and property market improves, if the Code continues to be
largely ignored, you can see legislation finally being
imposed.
This document is provided for information purposes only and
does not constitute legal advice. Professional legal advice should
be obtained before taking or refraining from taking any action as a
result of the contents of this document.
