Landlords have agreed a new voluntary Code of Practice for commercial leases, which will considerably benefit tenants in the future, according to Charles Woollam, a partner at property consultancy Donaldsons,
Woollam said the revised code is seen as the last chance for the property industry to self-regulate and avoid government legislation on leases.
“These revisions are part of a growing trend for the industry to tackle issues that have blighted relations between landlords and tenants for over half a century – driven in part by the threat of legislation and in part by landlords’ appetite to out-perform their peer group by exploiting better relationships with their tenants.
“Landlords’ greater willingness to abandon traditional lease structures in favour of bespoke deals reflects the growing maturity of the property investment market, which is now better able to determine value, rather than simply “mark down” anything that looks different from a traditional lease.”
Changes to the code will have two distinct benefits. One, to remove those situations where canny landlords have been able to rely on technicalities to take unforeseen advantage and two, to provide a framework where leasing deals can be more directly tailored to individual tenants’ needs while safe-guarding capital values.
The move towards giving landlords and tenants the flexibility to agree whatever commercial terms suit them, and removing the necessity to adhere blindly to old-fashioned ‘institutional terms’ is to be applauded.
However, this increased flexibility will surely have a price and it is not always going to be worth paying,” Woollam said.