Following a pan-industry consultation in 2019, RICS has published its Professional Statement, which encompasses a new Code for Leasing Business Premises (1st Edition February 2020) (“the Code”). The Code is effective from 1 September 2020 and will replace the 2007 Code.
The Code aims to make negotiations on lease terms fairer and more transparent for both landlords and tenants having regard to their respective commercial interests and to promote the issue of comprehensive heads of terms that should make the legal drafting process more efficient.
The most substantial change from the 2007 Code is that the new Code is being implemented as a RICS Professional Statement, which means that all RICS members and firms regulated by RICS must comply with it.
The Code sets out mandatory requirements and guidance on behaviours that constitute best practice. The mandatory requirements provide for the heads of terms to be recorded in writing and sets out the terms that must be included. The onus is on the landlord or their agents to ensure compliance with the mandatory requirements before the first draft of the lease is circulated.
There is more emphasis on the information shared between the parties during initial negotiations, promoting collaboration and making the process less adversarial. A party that is not represented by a RICS member or other property professional must be recommended to obtain professional advice. It is hoped that the new requirements will improve activity on the UK high streets to revive a struggling retail industry.
The Code and further guidance are available here
If you require further information contact our Real Estate Litigation team today.
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