Code for Leasing Business Premises – New Leases
The Code for Leasing Business Premises in England and Wales 2007 – also known as the Commercial Lease Code – was created following discussions between representatives of Landlords, Tenants and the Government. The Code aims to promote efficiency and fairness in Landlord and Tenant relationships.
The Code contains guidance on how lease negotiations should be conducted, the provisions that should be included in a lease, and how Landlords should deal with Tenants during the term of the lease and when it comes to an end.
It is not compulsory for Landlords to follow the Code but many choose to do so. The Government has in the past suggested that, if the voluntary Code is not followed by the property industry, legislation might be passed to make compliance with the Code compulsory.
The Code is endorsed by many industry heavyweights including the British Property Federation, the Association of British Insurers, the Law Society and the Royal Institution of Chartered Surveyors. A copy of the Code can be found at http://www.leasingbusinesspremises.co.uk/.
New Code-Compliant Lease Templates
We have added some “code-compliant” lease templates to our Shops & Restaurants, Offices and Industrial lease folders.
The new templates are similar in format to our existing leases but their provisions have been modified to comply with the Lease Code. Particular points to note are:
• There are fewer restrictions on assignment in the Code-compliant leases (but the Landlord still has the right to refuse consent to an assignment if it is reasonable to do so).
• The Code prefers repairing obligations to be limited to handing the premises back in the same condition as they were at the start of the term, unless the heads of terms expressly say otherwise. If the repair covenant is to be limited in this way it is wise to annex a schedule of condition to the Lease.
• Internal non-structural alterations do not require the Landlord’s prior consent, although they must be notified to the Landlord. Some Landlords are uncomfortable with this loss of control over alterations.
• Tenants receive a rent suspension whether the premises are damaged by an insured risk or an uninsured risk, meaning the Landlord bears the risk of uninsured damage.
The contents of this Newsletter are for reference purposes only and do not constitute legal advice. Independent legal advice should be sought in relation to any specific legal matter.