Code for leasing business premises

Question 1

What is the purpose of the Code for Leasing Business Premises?

Answer 1

To improve the quality and fairness of negotiations on lease terms and to promote comprehensive heads of terms.

This code is applicable to many property professionals regulated by RICS.

Question 2

Who must adhere to the Code?

Answer 2

RICS regulated property professionals (not lawyers)

Question 3

Who must be advised about the existence of the Code during lease negotiations under the mandatory requirements?

Answer 3

The unrepresented party must be advised and recommended to seek professional advice.

Question 4

What is the landlord responsible for regarding the heads of terms under the mandatory requirements?

Answer 4

Ensuring that the heads of terms are Code Compliant.

Question 5

What must be included in the heads of term under the mandatory requirements?

Answer 5

• Extent of premises
• Length of term and break rights
• Rent and rent review
• Repair obligations
• Rights to assign
• Permitted use
• Right to alter and obligations to return property to original state

Question 6

What should be included regarding rent and rent review in the heads of terms?

Answer 6

• Initial rent
• Frequency of payment
• Whether VAT will be charged
• Rent-free period
• Intention to review rent and how

These details help clarify financial responsibilities.

Question 7

What should be included under good practice regarding the premises?

Answer 7

Clear definition, plan, all rights

Question 8

What should be included as good practice under the Code?

Answer 8

• Length of term, renewal rights and beak rights
• Landlord’s title
• Repairs
• Premises
• Rent and rent review
• Insurance and damage

Question 9

What happens to rent if the premises are damaged by an insured risk?

Answer 9

Rent should be suspended.

This protects the tenant from paying rent for unusable property.

Question 10

What is good practice concerning landlord’s title in lease agreements?

Answer 10

Any consent needed to grant lease should be specified.

This ensures that the landlord has the legal right to lease the property.

Question 11

What should be considered regarding repairs in relation to the length of the term?

Answer 11

• Repairs should be appropriate to the length of the term and the condition of the premises.
• Tenants should be given appropriate protection against inherent construction defects