The Royal Institute of Chartered Surveyors (RICS) has issued a draft ‘Code for Leasing Business Premises’. Many of the measures in the new Code will be mandatory for RICS members – meaning they could face claims of negligence or disciplinary action if they fail to follow the Code’s requirements.
RICS says that lease negotiations and rent reviews can be a bone of contention between landlords and tenants of commercial property. “The new Code aims to ensure that tenants and landlords are armed with the relevant information they need to negotiate the fairest rent agreement and lease terms available to them,” it said in a press release.
RICS recently completed a consultation on the draft Code. The new regulations, which will replace the existing 2007 Code, will include mandatory requirements for RICS members. These include an obligation to approach negotiations in a constructive manner that demonstrates integrity and respect. The agreement must also be recorded in written heads of terms which include the main terms of the lease including the rent, the length of term, renewal, break rights and other key details.
The new Code also contains best practice statements, which it says should only be departed from with ‘justifiable good reason’. It is unclear however to what extent failure to follow these statements could lead to enforcement action against RICS members.
“The new Leasing Business Premises Code has teeth and needs be taken seriously by RICS members,” James Burgoyne, Director – Claims & Technical, Brunel Professions says: “Failure to act in accordance with the Code could lead to claims of negligence. Firms need to be aware that professional indemnity insurers will take a dim view of firms who fail to follow the Code’s mandatory requirements, and are oblivious to the Code’s voluntary requirements.”
RICS’s press release on the code has been published on its website. Reports on the new Code have been published by Leathes Prior, Eversheds Sutherland, Hogan Lovells, Local Government Lawyer and The Law Society.
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