Small Business Retail Leases Launched
The Royal Institute of Chartered Surveyors (RICS), in collaboration with the British Retail Consortium (BRC), has launched a new type of lease to attract small businesses into vacant high street units.
The RICS free small business retail lease has been developed to simply the commercial property lease process which has, in the past, been seen as complex and time-consuming – Both these issues have acted as a barrier to the the successful leasing of commercial property to independent retailers.
The new "off-the-shelf" leases, authored and developed by Nick Darby of SNR Denton UK LLP, will allow retail premises to be occupied more rapidly than before. By speeding up the occupation of empty units, the new free contracts aim to attract independents back into the high street.
Paul Bagust, RICS Associate Director, said:
“In simplifying the leasing process for landlords and small business tenants, we hope to support SMEs and provide a boost to the British high street in a time of decline – thereby contributing to overall UK economic productivity.”
Bagust added that the new leases also addressed one of the issues identified in last year’s Portas Review of the High Street;
“By offering mutually beneficial terms to landlords and tenants in a flexible lease, we are directly addressing the principles of the Code for Leasing Business Premises – identified in the Portas Review as a key tool in tackling the high street’s decline.”
Also welcome is the fact that the retail leases coincide with this week’s Independents’ Day where shoppers have been encouraged to visit small and sole-trader retailers.
The RICS UK Commercial Market Survey, Q2 2012 identified that occupier demand has fallen month-on-month for the last year, and that landlords have been offering incentives to fill empty premises.
The free small business retail lease is expected to stimulate demand at a time when it has been relatively subdued. Vacancy rates in town centres currently stand at 11.1%
The BRC’s Director of Business, Tom Ironside, spoke positively about people’s perception of town centre shops but pulled no punches when it came to the reality of the current climate:
“The high street is a much-loved institution but it can be a tough place to trade, with property costs a significant challenge for all. As well as assisting individual retailers, this new lease will make it quicker and easier to get those empty units back into use, preventing them acting as a drag on the performance of an entire area.”
Running in at 8 pages, the proforma leases provide tenants with
- Fixed property costs and
- A list of the tenants responsibilities
The leases are standalone short-term contracts for terms of up to 5 years. They include no rent reviews but do offer flexible terms and break clauses. The costs of lease negotiation are significantly reduced by the new leases which are available in two versions: one with security of tenure under the Landlord and Tenant Act 1954 and one without. This means that, under the Act, tenants have rights to renew their lease.