Member Article

New high-street property lease follows Portas report

A new lease, announced by Royal Institution of Chartered Surveyors, aims to support small high street retail businesses.

The initiative, launched in conjunction with the British Retail Consortium will simplify the leasing process for landlords and small business tenants, providing an easy to use contract, making clear to all parties the agreement they are entering into.

It comes in response to findings of the Land and Society Commission to deliver the government’s plan for localism.

RICS has worked to ensure that businesses have fairer terms in their lease, recognising that wrong decisions in lease negotiation can have catastrophic results for small business.

Aimed specifically at small high street retail businesses, the lease will be a stand alone, short-term contract with no rent review or break clause.

The flexible terms for occupiers will allow stability on property costs for small businesses and start ups.

It will also give small businesses the opportunity to present a business case with clear and stable property costs when requesting financing.

RICS North East Commercial Property Spokesman Kevan Carrick said: “In light of the Mary Portas report on High Streets, the new lease initiative from RICS and the BRC could not have come at a better time.

“Starting a new business is a risk at any time but doing so in the present market is more challenging. Any new business should seek to cut risks to a minimum.

“Taking a lease is the biggest contract that a business can take because of the ongoing liability for rent, business rates, service charge, other property costs associated with occupation and finally dilapidations. In contrast landlords need to seek the highest rent and longest period for letting to protect revenue, avoid the payment of void costs including empty property rates and to secure the capital value of the property and thus its investment value.

“This dichotomy of interests needs to be resolved to achieve an agreement that achieves a letting for the landlord and occupation for the tenant. The new lease initiative creates a balance of fairness between the parties, ameliorating risks for the tenant and stability of lease terms for the landlord.

“The new economic environment requires new ways of working. The new lease initiative is an approach that will help the parties achieve their objectives.”

National RICS spokesperson, Paul Bagust, added: “Businesses need to be more aware of their property decisions, which can impact negatively if made incorrectly.

“RICS is all too aware how challenging these economic times can be for small business owners.

“We’ve listened to the views and opinions on the challenges facing small firms and sole practitioners and worked with the BRC to produce this lease which we hope will make a huge difference to those businesses that need it most.”

This was posted in Bdaily's Members' News section by Tom Keighley .