Further regulation of commercial leases would not help the small firms it is intended to benefit, RICS director of policy Michael Chambers is warning.
The institution’s response to the government monitoring report on the commercial leases code of practice, currently being drafted, is expected to say that the bulk of tenants locked into long-term leases that contain upward-only rent review clauses are blue-chip companies.
Standard institutional leases tend to be on properties in the most desirable locations, it says. ” Small firms are less likely to be in prime areas,” said Chambers.
Planning Minister Nick Raynsford, understood to be acting under pressure from small businesses, warned the industry earlier this year to more aggressively promote alternatives to upward-only rent reviews in order to avoid greater regulation of lease terms.
Chambers believes that the increasing number of shorter leases agreed and a low inflation rate means that the case for regulation was greater at the start of the 1990s than at the end, when this report was drawn up. “The government would have to have a strong argument to justify statutory intervention,” he said.
EGi News 31/05/00
