In July, the Royal Institution of Chartered Surveyors (RICS) and the British Retail Consortium (BRC) jointly released a new small business lease for the retail sector, called the Small Business Retail Lease.
Its authors say a suite of measures and incentives are required to attract businesses back to the high street.
One of those measures is to address the often complex and time consuming commercial property leasing process, seen as a barrier to letting commercial premises to independent retailers.
The new lease, developed by SNR Denton, is intended for a lock-up shop/high street type property let on a short term basis of no more than 5 years, with no rent review and is particularly aimed at business start-ups.
It aims to allow retail premises to be occupied more rapidly than before and help attract independents back to the high street.
There are versions of the lease for use when granting leases either inside or outside the Landlord & Tenant Act 1954, a useful template heads of terms sheet and guidance notes for tenants and advisors.
Rent is payable monthly in advance and it allows for a tenant’s break right at any time after a fixed period, where the only condition is giving the right length of notice.
There’s no service charge and repairing obligations are limited by a schedule of condition.
The lease complies with the Code for Leasing of Business Premises, identified in the Portas Review as a key tool in tackling the high street’s decline
The aim is to keep legal costs low for both parties but its authors are keen to point out it’s not a substitute for legal advice.
The lease is supported by the Department for Business Innovation & Skills and the British Property Federation.
The lease also reflects current market trends – the Property Data Report 2012 published in August (which I referred to in Who Owns What?) showed the average length of a new lease in 2011 fell to below 5 years, compared to 8.7 years in 1999, and that 33% of new leases had break clauses.
This new lease seems to me to strike a fair balance between landlord and tenant for high street type properties, so I hope it’s successful.