Minister rules out ban on upward-only rents
by Ewan Turney
A ban on upward-only rents has been dismissed by the Government in a blow to pub tenants and lessees across Britain. The decision follows last week's rubber-stamping by the Government and Office of Fair Trading of the Trade and Industry Select Committee report on pubco power.
In response to a long-awaited report by Reading academic Neil Crosby on commercial leases, Yvette Cooper, from the Office of the Deputy Prime Minister, said the Government would not legislate against upward only rent review clauses "at present". Instead it will continue to "monitor" the situation and retain the right to intervene if the flexibility of commercial leases is not improved.
The Reading report, aimed at monitoring the operation of the 2002 Code of Practice for Commercial Leases, revealed that a general lack of property awareness and a failure to seek legal advice meant that the vast majority of small business tenants, such as licensees, were unable to strike the most advantageous bargain that might otherwise have been available to them.
"The Reading report shows that many small businesses fail to obtain the best leasing terms available because they lack essential information about the leasing environment and the local market," said Cooper. "There is a need for action by both the Government and the property industry."
The Government has also called for a joint review of the Code of Practice by the property industry and tenants after the Reading report revealed that just half of all tenants were aware of its existence. The Government wants the code, currently a set of 10 recommendations, to form "an effective mechanism for dealing with complaints". Cooper added: "We want to make sure that everyone negotiating a lease adopts the code."
The British Property Feder-ation welcomed the minister's statement as a "common sense approach". Chief executive Liz Peace said: "I hope we've shown there's a place for upward-only rent reviews in the UK which, when used appropriately, underpin some of the strengths of our market and often provide benefit to occupiers."
