New Code For Commercial Leases

The new Code of Practice for Commercial Leases in England and Wales 2007 was released today. This code has been drawn up by the RICS and other representatives of landlords, tenants and the Government.

Much of the code has been leaked in the property press and, as anticipated, it is phrased in terminology that is more strenuous than in the past. It is much shorter than its predecessor and is accompanied by a Guide for Occupiers and Heads of Terms Checklist intended to encourage the parties to discuss key issues at the outset of the transaction. The code provides amongst other things for the following:

• Break clauses
  
  
The only pre-conditions to a tenant exercising its break clause should be that the tenant is up to date with the basic rent, that it gives up occupation and it leaves behind no continuing sub-leases.

• Rent review