Guest Blog by Adam Youatt of Gateleys Leases... part two
So is the market really ready to embrace standard leases? Well an attempt is being undertaken by the British Property Federation supported by a number of its members such as the likes of Land Securities, Westfield and Prupim who are looking to launch a standardised commercial lease. This is not the first such attempt there has been. The Clear Let Lease produced by Land Securities had a similar aim and there are of course the RICS standard retail leases and the Law Society standard business leases. But BPF's plan is different because it wants to produce variants for all the different property types, such as retail, office, shopping centre and industrial units, creating a full suite of leases alongside lease management documents such as a rent deposit deed and licence for alterations. Their lease is going to be designed to make transactions quicker and less contentious as it will adopt a fair starting point and incorporate most of the usual safe guards that tenants currently seek during negotiations. As it is a BPF lease, it is Lease Code compliant. A starting point for the lease was Land Securities’ Clear Let lease, which is based on plain English language and seeks to cut down on negotiations as it is fairly evening drafted from both the landlord's and tenant's perspective. As a result, there has not been any tenant involvement in the drafting process. It is, effectively, a landlord's document deliberately drafted in a manner that results in a very little need for negotiation although, so as not to give you the wrong impression, this “simple lease” is still around 60 pages long.
The current stage the process has reached is that the working party, consisting of the BPF members and a select number of law firms, has now produced the draft lease for a unit in a shopping centre and it has been sent out for comments. Various BPF landlords and their retained law firms will consider the draft, and, if this stage is successful, the working party will then move to agree that the “BPF Modern Lease”, as it is being called, can be used by major institutional property owners. The BPF's stated aim is that all landlords should, in time, use it in the same way that a large amount of banking documentation is now industry standardised.
So will this acceptance of a standardised approach be achieved? Maybe. A simpler lease that can be negotiated more quickly may save everyone time and money but are we actually about to see a revolutionary change in lease documentation – unfortunately I think it remains to be seen – the property industry, in particular the property investment and banking sector, are a generally conservative and cautious bunch. But, for those landlords that are advocating the customer service approach to leasing they may see an opportunity. Ultimately one reason for perhaps embracing the initiative is because it will reduce the involvement and, therefore presumably the cost, of lawyers….
02 July 2013
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