Perhaps surprisingly, only a small number of  landlords grant the majority of “investment  grade” commercial leases. BPF analysis of IPD  data suggests that there are approximately 11,000  commercial/investment leases granted every year  in England and Wales and that just 15 landlords  grant about 70% of those1 . This is good news for a  major new initiative: the Model Commercial Lease  (MCL). Dion Panambalana explains the principles  behind the new initiative.

Back in 2011 the BPF commercial committee  decided that it was time to review the commercial  leasing process in England and Wales. Many major  landlords produce fairer terms as a first draft than they  did 25 years ago. However, a lack of standardisation  both in lease structure and content contributes to  commercial leasing being slower and more costly than  it needs to be.

A working group of real estate lawyers and landlord  representatives was set up to find a solution. Their remit  was to produce a standard starting point that most, if  not all, major landlords could adapt to their offer and  which most fair-minded tenants could work with. At the  same time, there was an opportunity to modernise the  wording and style.

In order to achieve this aim, the working group  consulted informally with most of the major real estate  law firms, and consulted more formally with a number  of BPF members.

The MCL comprises a family of templates for  commercial leases and associated documents.  The documents will be freely available for anyone –  landlords or tenants – to download from a public website (expected to be  available from the second week in July), without charge,  and to customise to their particular requirements.

Different versions of MCL leases will be available to  suit different types of commercial buildings, such as  offices, shops, shopping centre units and industrial/ logistics units. Bolt-on provisions, such as an offer-back  and turnover rent clause, will also be available. The asset  management documents include a rent deposit deed  and typical licences. A list of the documents contained  in the MCL suite of documents is set out at the end of  this article.

The MCL is intended to avoid much of the unnecessary  negotiation on most routine letting transactions by  representing a fair starting (and, in many cases, end)  point for both parties. Furthermore, the MCL is largely  compliant with the requirements of the Code for Leasing  Business Premises (2007).

The legal profession tried a “standard lease” before  (in the 1990s) and then there was little industry and  professional support for such a project. Will it work now?  If now is the time for a more consistent approach to the  routine parts of the leasing process, then yes it could as:

  • the initiative on this occasion came from the property  industry, not from lawyers (albeit most transactional  lawyers welcome it);
  • after decades of negotiating the same points, mostly  to reach the same end, lawyers themselves feel that  life is too short to argue points that have little or no  practical benefit;
  • you don’t need to use the lease unamended. You can  customise it to the property and to the deal; and
  • perhaps most importantly, the landlord and tenant  relationship is now less confrontational than in the  past, and many experienced counterparties do not  relish unnecessary conflict.

The MCL should, in time, also speed up (and lower the  cost of) investment and financing transactions. Lawyers  and their clients will be familiar with MCL documents,  making it simpler to identify the issues that need to be  reported upon to buyers and funders.

The working group intends to keep the MCL under  review to ensure that it remains up to date. Successive  versions of every document – the current version and  all previous versions – will be available for everyone to  view and download free of charge on the MCL website.

Transition will take some time. For an existing  controlled environment, such as a shopping centre,  with multiple, possibly hundreds, of leases, it could  take years. But new projects could use the MCL  immediately. Similarly, many other properties can,  with care, use the MCL in new lettings.

Standardisation of the parts of the lease which lend  themselves well to a consistent approach will take a  while and only work if transaction teams want it. So a  big launch is not in the offing. Nor is a call for universal  adoption. Time is not of the essence on this one.

Documents in the MCL suite of documents


  • Office – whole and part;
  • Office on a business park – whole and part
  • Retail premises – whole and part
  • Retail premises on a retail park – whole and part
  • Shopping centre unit (with optional turnover rentvariant)
  • Industrial/logistics unit – whole
  • Unit on an industrial park – whole

Additional bolt-on clauses

  • Turnover rent clause (for use with retail leases)
  • Offer-back clause (for use with any lease)
  • A3 / A4 / A5 use clauses (for use with retail leases)
  • Index-linked rent review clause (for use with any lease)
  • Option to renew clause (for use with any lease)
  • Service charge cap clause (for use with any lease)

Asset management documents

  • Rent deposit deed
  • Licences to assign, underlet, change use and alter
  • Licences allowing undertenant to assign, underlet,  change use and alter Documents in the MCL suite of documents