University report reveals that tenants are more concerned about subletting than rent reviews
Upward-only is still the “almost universal” industry standard for rent reviews, despite the government’s voluntary code, according to Reading University’s final report on commercial property leases.
But with fewer than half of all new leases containing rent reviews, fewer tenants are affected by them.
According to the report, commissioned by the Office of the Deputy Prime Minister (ODPM) and published on Thursday, tenants are far more concerned about lack of flexibility in assignment, subletting and the range of alternative lease prices.
Ian Fletcher, director at the British Property Federation, said: “We are pleased the research concludes that upward-only rent reviews are not a big issue at present for occupiers.
“However, there will be no complacency on our part, because the report highlights some other very real issues.”
The British Retail Consortium said that the report was the “final nail in the coffin for upward-only rent reviews” and urged the government to “press on and put an end to an inflexible system that is undermining the UK’s competitive edge”.
Although 70% of office and 75% of industrial leases do not have a review, nor feature a break prior to the review, the figure dropped to 40% within the retail sector.
The government is expected to publish its conclusions on the report in the spring.
EG 5 March 2005 will include an article by the report’s authors discussing their findings.
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Report author’s view |
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Co-author of the report, professor Neil Crosby, said: “Upward-only rent reviews are still there on 50% of leases. If people feel it is an outrageous clause, they’ll still have issues with it. “Our report confirms what landlords are saying, in that it’s not the biggest issue for tenants and that things are moving in the right direction. “But landlords have had 12 years to get this right, and they may not have moved far enough to stop further legislation. This review is not going to make government like upward-only rent reviews, but it does tell government that it is becoming less and less of an issue.” |
References: EGi Legal news 26/02/2005
