Leasing and Letting

Question 1

What is the key RICS guidance on Leasing and letting?

Answer 1

RICS Professional Stanard: Code for Leasing Business Premises (2020).

Question 2

What is the structure of the RICS Professional Stanard: Code for Leasing Business Premises (2020)?

Answer 2

Part 1: Intro
Part 2: Mandatory Requirements
Part 3: Lease negotiation best practice
Part 4: Appendices A and B
A = HOTs template and checlisy
B= Guide for Landlords and Tenants

Question 3

What is the main role / aims of the RICS Professional Stanard: Code for Leasing Business Premises (2020)?

Answer 3

1. Improve quality and fairness of negotiations on lease terms
2. Promote use of new comprehensive HOTs (in appendix A) to make legal drafting of leases more efficient.

Question 4

What is Part 2 of the RICS Professional Stanard: Code for Leasing Business Premises (2020)?

Answer 4

Part 2: Mandatory Requirements

Question 5

What does Part 2 of the RICS Professional Stanard: Code for Leasing Business Premises (2020) concern / can you provide some information/overview of it?

Answer 5

1.1 - negotiations must be approached in a construction and collaborative manner

1.2 - A party not rep’d by an RICS memeber / property professional must be advised by the other party or its agents about the existence of the code (and supplemental guide) and must be recommended to obtain professional advice

1.3 - The agreement regarding the terms of a lease on a VP letting must be recorded in written HOT, stating STC and summarising as minimum the position of a number of aspects.

Question 6

What are the aspects that must be covered as a minimum in HOTs accordin to 1.3 in Part 2 of the RICS Professional Stanard: Code for Leasing Business Premises (2020)?

Answer 6

Identity and extent of premises

Term length and if In/Out of 1954 Act

Amount of rent, payment frequency and whether exlcusive of business rates (normally is)

Any rent free / incentive

Any RR’s including frequency and basis of review (ie UORR or RPI/CPI linked)

Any renewal or break options

Requirement for guarantor or rent deposit

Liability to pay SC and/or insurance premiums

Alienation - Rights to assign/sublet/charge or share premises

Alterations

Reinstatement obligations

Repairing obligations

Permitted use (ie B1 Offices) and if any changes of use are allowed

Any special rights to be granted (ie car park/data access)

any initial alterations or fit-out (if known)

If LL intends to charge VAT on rent (normally do)

any conditions of the letting e.g subject to surveys, board approvals, planning permission or covenant strength

Question 7

What is included in Part 3 of the RICS Professional Stanard: Code for Leasing Business Premises (2020)?

Answer 7

Part 3: Lease Negotiation best practice

Provides advice on lease terms to include such as rent deposits, rent reviews, alienation, SC and repairs.

Question 8

What is included in Part 3 of the RICS Professional Stanard: Code for Leasing Business Premises (2020)?

Answer 8

Part 4: Appendices A and B
A = HOTs template and checlisy
B= Guide for Landlords and Tenants

B is not mandatory and provides guidance for range of lease terms and letting issues e.g.
- HOTs negs
- SC
- Rent deposits
etc