Commercial businesses set to benefit from update on lease negotiations

RICS has today launched new industry requirements to support and benefit commercial businesses in commercial lease negotiations.

The professional statement, Code For Leasing Business Premises, – which will be mandatory for all of RICS’ UK members to follow – aims to make the process of lease negotiations faster, more transparent and fairer.

With the support of leading organisations including REVO (Retail Evolution) and FSB (Federation of Small Business) * the new requirements will encourage businesses to work with landlords to negotiate more flexible leases.

This initiative is of particular significance in the struggling retail sector, where it is hoped the new requirements will improve activity on the UK high streets.

The latest RICS Commercial Market Survey shows landlords are trying to entice businesses back to the high street, with the incentives on offer for prospective retailers returning the highest net balance since the financial crisis in 2009 and the incentives for office space growing since the EU referendum.

Geoff White, RICS Policy Manager, commented:

“Many high streets and town centres face a perfect storm from online competition, challenging changes in consumer behaviour, plus seemingly ever-increasing rents and rates.

“The government has committed to tackling this on a number of fronts, including a fundamental business rates review – which RICS has demanded for a number of years – rates exemptions and reductions for smaller businesses, as well as through its High Streets Task Force and Town Centres Fund.

“One aim is to boost town centres by attracting more locally-based small businesses back to the high street and by introducing the new Code for Leasing, RICS is playing an important role by offering a route to reduce complexity, risk and cost faced by hard pressed business owners.”

Code For Leasing Business Premises promotes the value of and encourages businesses to seek the advice of property professionals, saving companies time and money. Lease negotiations can be complex and time consuming, and under the new requirements the process is set to improve the efficiency of lease negotiation.

This professional statement follows the RICS Service charges in commercial property which aimed to outlaw ‘rogue’ landlords and managing agents whilst making service charges more transparent for the end user. These RICS statements set out to create a fairer and more professional approach to property management in the commercial sector.

Paul Bagust, RICS Global Property Standards Director, commented:

“The UK’s commercial market is changing; retail is facing some of its toughest times as consumers change the way they interact with their highstreets. The office sector is being transformed by flexible workspace. By working with FSB, the Law Society, REVO, BCO and BPF we have been able to take existing industry guidance and cement them into RICS formal requirements.

“RICS property professionals work towards the highest standards and are instrumental in the success of the UK’s built and natural environment. By working to ensure lease negotiations for commercial tenants, landlords and guarantors not only offer flexibility to suit current market trends but are transparent and clear to understand, it can hopefully help promote more investment into the UK’s high streets.”

Kindly shared by Royal Institution of Chartered Surveyors (RICS)