Reading University’s final report on commercial property leases has concluded that the 2002 Code of Practice is having little “direct impact” on lease negotiations.
But it argues that the Code is part of “a wider pressure from Government ” which is helping to encourage increased flexibility and choice.
The report, which has been monitoring the operation of the 2002 Code of Practice for Commercial Leases, is the latest instalment in a long running policy debate about the operation of the commercial property landlord and tenant relationship in the UK.
It found that while some significant aspects of leases such as lease length, repair covenants and the operation and timing of tenants’ break clauses, have become more flexible, other clauses such as assignment and subletting restrictions remain very much as they have in the past.
The research also found that although the upward-only form of review still dominated the UK commercial leasing market, the number of leases that had no reviews in them now stood at more than half of all leases.
“Rent review type is one of the least often negotiated major aspects of the lease. It consistently comes behind lease length, break provisions, repairs, assignments and subletting,” said the report.
Neil Crosby, co-leader of the project said: “Our interim report was greeted with howls of protest from the property industry and the property press who wrongly interpreted it as suggesting that there was little change in leasing markets.
“The final report confirms many of the findings of the interim report but indicates a varied picture of flexibility, choice, and awareness. It remains to be seen if enough progress has been made to satisfy Government.”
The Government is expected to respond the findings in the spring.
References: EGi News 24/02/05
