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To assist its leasehold members in their negotiations with landlords, retra has made available practical advice and guidance. Chief Executive of retra's, Mark Hayward, outlines what is available.
A new publication entitled The Code for Leasing Business Premises in England and Wales 2007 (The Code) has recently been made available to retra's members via the retra web site (www.retra.co.uk). This has emerged as a result of pan-industry discussion between representatives of landlords, tenants and the Government. retra contributed to the development of this publication via the British Retail Consortium (BRC).
The publication is yet another illustration that practical benefits can and do flow from retra's engagement with the BRC. The publication comprises of three items. First, there is the lease code itself, the purpose of which is to promote efficiency and fairness in landlord and tenant relations. Second, there is a checklist that leaseholders, or potential leaseholders, can use in their landlord negotiations, either before the grant of a lease or in connection with lease renewal. Third, and finally, model 'heads of terms' have been provided.
A great deal of time and attention has been devoted to ensuring that The Code comprises of easy-to-access information that is written in clear and concise English. As retra's chief executive I know this only too well as I spent considerable time on successive drafts of The Code as it was knocked into shape. The end result, I firmly believe, is a good one.
The lease code: what does it cover?
The lease code covers ten distinct areas: lease negotiations; rent deposits and guarantees; length of term, break clauses and renewal rights; rent review; assignment and subletting; service charges; repairs; alterations and change of use; insurance and on-going management.
It is tempting to describe much of the lease code as a statement of the obvious. Except that, of course, if it were obvious, there would have been no need to state it. What the lease code does is to provide a framework within which a prospective leaseholder can reasonably expect a landlord to operate.
The checklist: practical tips
On its own the lease code would be useful but not sufficient. Therefore, a checklist of practical tips has also been provided in connection with the ten distinct areas covered by the lease code itself. Thirty-seven tips in all have been included in the checklist. For example, under the heading of 'Lease Negotiations' (which is Item 1 in the lease code), the prospective leaseholder is advised to make sure that every term and condition in the landlord's lease offer is understood – including the total cost of the lease until the lease ends – and to ask the landlord or the landlord's representative to confirm in writing that the offer meets the lease code.
The model heads of terms: what are they?
The model head of terms is a suggested summary of the agreement between the leaseholder, or prospective leaseholder, on the one hand and the landlord on the other hand. It can be used to instruct lawyers to draw up the formal lease document. The heads of terms and the lease should both comply with the recommendations set out in the lease code, though the former will be superseded once the lease has been granted.
The Code: who supports it?
As I indicated earlier in this article, The Code is the result of pan-industry discussions. In addition to the BRC it has been endorsed by, amongst others, the Federation of Small Businesses (FSB); the Forum of Private Business (FPB); the Confederation of British Industry (CBI); the British Property Federation (BPF); The Law Society and the Royal Institution of Chartered Surveyors (RICS). This means that there is a strong impetus and support underpinning The Code. Any retailer who has fallen foul of his landlord during tortuous lease negotiations knows only too well that this process can result in a chasm – or breech – from which the lawyers ultimately derive most benefit. retra members who are leaseholders now have the means to manage their landlord negotiations and to achieve the best possible outcome.
