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Consultation on new RICS’s Code for Leasing business premises
- Apr 10, 2019
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The RICS professional statement is the result of pan-industry discussion between representatives of landlords, tenants and other professional bodies. This builds on the work done on the previous industry Code which did not have an official RICS status and therefore had no regulatory requirements attached.
The requirements are limited.
Lease negotiations must be approached in a constructive and collaborative manner.
A party that is not represented by an RICS member or other property professional must be advised about the existence of the Code and its supplemental guide and must be recommended to obtain professional advice.
The agreement as to the lease terms on a vacant possession letting must be recorded in written heads of terms, stating that it is “subject to contract” and summarising as a minimum the position on a number of aspects listed in the Code. They include such matters as are typically included in a set of heads of terms, but this list provides clarity as to what must be included.
At a lease renewal or extension, the heads of terms must comply with the list except for terms that are stated to follow the tenant’s existing lease, subject to reasonable modernisation.
The landlord or its letting agent will be responsible for ensuring that heads of terms complying with the Code are in place before the initial draft lease is circulated.
The objective of the document is to improve the quality and fairness of initial negotiations on lease terms and to promote the issue of comprehensive heads of terms that should make the legal drafting process more efficient.
The lease code and the accompanying template heads of terms should be used as a checklist for negotiations before the grant of a new lease and at the time of any lease renewal.
This should assist RICS members in ensuring that landlords, tenants and guarantors who they are advising have a clear understanding of the commitments that they are entering into.
This document has been significantly amended following its original consultation and it would be helpful to know of concerns made during that process have been addressed.
This consultation closes at midnight on 5 May 2019.