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Planning: Commercial Leases

Volume 712: debated on Monday 6 July 2009


My honourable friend the Parliamentary Under-Secretary of State (Ian Austin) has made the following Written Ministerial Statement.

I am today publishing a report by the University of Reading on the dissemination and use of the 2007 code for leasing business premises.

The property industry introduced the present version of this voluntary code in response to continuing government concern about the degree of flexibility in the commercial property leasing market and the lack of information and advice available to small businesses about the implications of property leasing. The new code is an excellent document, which, if implemented, would make a big difference. Besides a code of practice for landlords, the code provides step-by-step guidance for tenants taking out leases and a “heads of terms” document enabling them to see at a glance the commitments they would be taking on.

We undertook to monitor the implementation of the code. As a first step, we commissioned Reading University to study the dissemination and use of the code once it had been in place for a year.

This report about dissemination and use of the 2007 code paints a very disappointing picture. It suggests that small business tenants are not receiving any substantive information on the code from any source. Except for some well advised major tenants, the code is not a primary tool for the negotiation of new leases.

If parties do not know about the code and do not use it, it will have no impact. The property industry has asked us not to legislate in this area and we have held back to give the 2007 code a chance to work. But if the more substantive research shows that the market has not responded, legislation is bound to come back on to the agenda.

I call on the property industry, while there is still time, to redouble efforts to disseminate and use the code—every tenant negotiating a lease should have a copy and be encouraged to use it. In particular, the professions—surveyors and solicitors—have a special responsibility for making it available. A professional, modern industry will surely have an interest in ensuring that its customers are fully and properly informed about the leasing choices they are making. The UK commercial property industry should be a world leader, not just in its level of sophistication but also in the fairness with which it operates.

Copies of the report have been placed in the Library of the House.