09/09/2007

Commercial Landlord’s Accrediation Scheme

Simon Mydlowski, commercial property solicitor

The British Property Federation has formed the Commercial Landlord’s Accreditation Scheme (CLAS), which is a scheme available to all commercial landlords in England and Wales. The scheme is a development of the code for leasing business premises in England and Wales (2007), allowing members of the Accreditation Scheme to signify their membership by displaying the CLAS symbol on their marketing materials. The scheme is self-regulatory and includes a complaints procedure and outlines possible remedies once a complaint has been made.

In 1985 a voluntary code of practice for commercial leases was published as a foundation block for an agreement between professional and industrial bodies involved with commercial property. The 1985 Code was an attempt by property professionals to regulate themselves and discourage the government from applying a statutory code, which would be binding on all parties and possibly inconsistent with the property industry’s requirements as a whole.

The 1985 Code did not have any real impact on the market or practice and as a result of such, the government threatened to put legislation in place. A revised edition of the code was published in April 2002 and this time it was deemed that the second edition of the code made a greater impact on the market. However, the code was little used in individual lease negotiations.

A further edition of the code has now been published (March 2007) and seems to be a fairer balance between the needs of both the landlord and tenant by offering a greater degree of flexibility for all parties when negotiating commercial lease terms.

The third edition of the code is broken down into three distinctive parts.

Leasing Business Premises: Landlord Code

This part of the code is an aid to Landlords (and their agents) to assist them in formulating documents from the outset and includes:

  • Rent, deposits and guarantees
  • Recommendations as to how lease negotiations are conducted
  • How to draft heads of terms – considering items such as length of term, break clauses, renewal rights, rent review, ability for tenants to assign and sublet, service charge, repairs, alterations and changes of use and insurance
  • Ongoing management of the lease once in place

Leasing Business Premises: Model Heads of Terms

Most lease transactions start with heads of terms, which set out the position for the parties. However, badly drafted heads of terms can produce their own problems once lease negotiations have started. The code seeks to provide a model set of heads of terms, which can act as a guide for all parties who can use them during negotiation of the lease.

Leasing Business Premises: Occupiers Guide

The converse of the Landlord’s Guide is that of a guide to assist tenants. There are occasions where tenant’s expectations can sometimes be very different to that of a landlord’s, both when negotiating a lease and during the term of lease. This part of the code addresses the point and assists tenants in managing their expectations and perhaps, gives a greater insight as to how a landlord operates under the CLAS.

One of the scheme’s goals is to offer tenants redress against landlords who breach the code. The redress against landlords who persistently disobey the code can include both private and public reproach and possible suspension or expulsion from the CLAS.

Summary

My view is that despite membership of the CLAS maybe involving more “red tape” for landlords, they are sending a message that they are innovative and understand a tenant’s needs more than those who choose not to sign up. I also anticipate that the property profession as a whole does not want to be regulated by the government. Therefore, this latest version of the code will be adopted by more and more landlords, which in turn will hopefully given them a commercial edge in a very competitive market.

From a tenant’s perspective as an end user of the property market, it will help when searching for premises and remove some of the strain of negotiating terms for new accommodation, thereby allowing them to concentrate on their own business goals. The scheme also aims to help tenants build a trusting relationship with their landlords.

As with all schemes of a voluntary nature it must have a successful uptake to be credible. The scheme not only requires membership from large corporate landlords but also from the small landlord with a single unit to let.

If you would like any further information regarding the CLAS or any aspect of commercial property Gordons LLP have a team of highly experienced lawyers ready to provide you with straight forward no nonsense solutions. Contact Simon Mydlowski on 01274 202 154 or email simon.mydlowski@gordonsllp.com