RICS Professional Statement: Code for leasing business premises 2020 Flashcards
What is the structure of the Professional statement?
Part 1: Introduction
Part 2: Mandatory requirements
Part 3: Lease negotiation best practice
Part 4: Appendices
What are the objectives of the new code?
To improve the quality and fairness of negotiations on lease terms and promote the use of a new set of comprehensive heads of terms to help the legal drafting process
What are the mandatory requirements under the code?
1.2 A party that is not represented by an RICS member or other property professional must be advised by the other party about the existence of the code and must recommend seeking professional advice.
Under the mandatory requirements of the code, name a few things that must be included in heads of terms
Negotiations over the lease must be approached in a constructive and collaborative manner
The Heads of Terms must state “subject to contract”
The extent of the premises, requiring the Landlord to provide a land registry compliant plan if the lease is registrable
The length of the term and whether the lease is to be drafted in or outside of the security of tenure provisions within the 1954 act.
The amount of rent and the frequency it is to be paid and whether exclusive of business rates
Any rent free periods or other incentives
Which lease terms have an effect on value?
Lease length/term
Break clauses
Alienation
Repairing obligation
Security of tenure provisions
What is included in the appendices of the RICS PS: Code for Leasing Business Premises?
Model Heads of terms
- Detailed template in Appendix A1 and a checklist in A2
A guide for Landlords and Tenants
- Set out in Appendix B but does not form part of the professional statement.
- It provides detailed practical guidance for both parties on a range of lease terms and letting issues, such as the negotiation of Heads of Terms.
