A combination of falling consumer numbers and rising costs for retailers has resulted in a steady decline of the British ‘High Street’. Vacancy levels are at an all-time high and expected to rise still further in the coming 12 months. In an attempt to stem the tide, the Royal Institute of Chartered Durveyors (RICS) (in partnership with the British Retail Consortium) has intervened by offering a way to make ‘the leasing process shorter and less complicated for small and new businesses’.4
This effort to make the High Street more attractive to small businesses comes in the form of a simplified contract providing tenants with ‘fixed property costs and a clear picture of their responsibilities as well as helping landlords achieve ‘a rental income on a previously unoccupied space’. 5
The RICS Small Business Retail Lease (SBRL) was released in the summer of last year and comes in response to the Portas Review (published late in 2011) which contained 28 recommendations to reinvigorate the high street, one of which was the promotion of the RICS Leasing Code.
Key features of the Leasing Code
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Although it is thought that the majority of leases will preserve the tenant’s statutory right to renew the lease at the end of the term, there may be instances where such a right is not suitable (for example if the landlord plans to redevelop the site after expiry of the term). Accordingly, a second version of the lease is available in which the renewal right is excluded.
Will it work?
Many believe that a recessive economy and high vacancy rates should place tenants in a relatively healthy bargaining position and that the SRBL strikes a fair balance between the interests of both landlord and tenant for high street properties.
Since the initiative is less than 12 months old, it is difficult to say with any certainty whether it will be a success, although that will depend to a large extent upon the readiness of commercial landlords to adopt it.
Perhaps only if new and independent retailers press for the use of the SBRL, will the high street once again be the beating heart of British retail.
Both versions of the SBRL, along with guidance notes and recommended heads of terms, are available to download from the RICS website6. However, it should be noted that as the SBRL is a legally binding contract between the landlord and tenant, it is important that in spite of its relative simplicity, both parties take independent professional advice.