Small businesses may get a better deal

A new stronger code of practice has been launched that is intended to make leasing shops and offices more user-friendly for small businesses.<

The new code will mean that small businesses get a step-by-step occupier’s guide to contract negotiations which will help tenants avoid the pitfalls of bad contracts. It will allow them to see at a glance what kind of lease they are signing up to.

The code needs to make certain all businesses get a better deal; the Government will keep this under close review to see if further action is needed.

All landlords will now have an industry standard requiring them to offer clear property leases that don’t tie tenants in to contracts for long periods. The code also encourages them to move away from upward only rent review clauses – which have meant that landlords were able to keep on increasing rents unchecked. 

The improved code aims to create a new framework for a modern and competitive property industry that puts landlord and tenant in a partnership relationship;

Launching the code Housing Minister Yvette Cooper said: “The new Code will mean all businesses get a better deal on commercial property leases. This is as an important step forward by the industry that sets out clearly and simply best practice and advice for lease negotiations.” 

“My challenge to the industry is to make sure that it is used in all lease negotiations.  We shall be keeping a close watch on the market to see that it makes a real difference."

A spokesman for the British Property Federation said: “The code is designed to ensure an equality of arms between landlords and small occupiers. Often, many small businesses will not have legal representation when negotiating leases and can find themselves signing up for conditions they didn’t bargain for.”

The new code offers three documents to improve leasing practice

• A succinct two-page ‘landlord’s code’ making it much clearer what is expected of landlords.
• A step-by-step ‘occupier’s guide’ for tenants will take them through the potential minefield of the leasing process.
• A checklist will show tenants at a glance what they are signing up to. All parties and their agents and solicitors can use during lease negotiations.

The Government says it remains committed to ensuring that thriving high streets must remain at the heart of all communities; to keeping in place planning rules that enable local planning authorities to prioritise town centres over out-of-town shopping and block developments that threaten the survival of high streets and small shops.