The code for leasing business premises 2007

When you negotiate a new lease you should ask if the lease is to be “Code compliant”, and if not, you should enquire as to why this is the case as the Code has distinct advantages for tenants.  In the present financial climate, many landlords are finding it hard to get good tenants and therefore tenants should be aware that they are in a much better position to negotiate lease terms that are more “tenant friendly”.  The Code is advisory and not legally binding and therefore cannot be enforced by law on a landlord. It was, however, launched by the government to achieve a fairer balance between the landlord and tenant and greater flexibility in commercial lease terms.

It is important for a tenant to raise the matter of the Code at the negotiation stage so that any Code compliant terms are included in the Heads of Terms before they reach the lawyers advising on the lease itself. In this way, the actual legal side of the transaction should be cheaper and shorter in time to complete!

The main benefits of the Code for tenants are as follows:-

1. If you have a “break clause” in the lease the Code provides that the conditions attached to the break must be clear and any pre-conditions limited.

2. Rent reviews should be clear and should not contain provisions that are aimed to achieve a headline rent.

3. On transferring the lease the only restriction on such a transfer should be obtaining the landlords consent, which should not be unreasonably withheld or delayed, and with limited preconditions to such consent. 4. It contains recommendations as to service charge information which should be given to tenants at the negotiation stage.  5. It states that the tenants repairing obligations under the lease should be appropriate to the length of the lease and appropriate to the condition of the premises at the start of the lease.  6. It contains recommendations on alterations, change of use and insurance.