ODPM set to act on commercial leases

The Office of the Deputy Prime Minister (ODPM) is widely tipped to call for action on commercial leases.

It is likely to set up a steering group to advise on plans to reform the subletting and assignment of commercial leases.

The group is expected to include legal and professional experts and will inform the government on how to regulate subletting in the property industry.

The government says it is concerned about unfair restrictions on subletting in leases and transparency to tenants.

Following consultation by John Prescott's office and publication of a report into the property market by Reading University, the government decided there was no need to take legislative action on upward-only rent reviews.

Although the consultation was not directed at the pub trade, many licensees had hoped the ODPM would bring in legislation to force property landlords - including pub companies - to offer more flexible leases, negotiate fairly with tenants and end upward-only rent reviews.

Reading University has been monitoring the impact of the property industry's code of conduct on commercial leases.

The code, launched in April 2002, covers all property companies and provides an outline of good practice for landlord and tenant negotiations.

A spokesman for the ODPM told The Publican: "We are going to ask the property industry to make the existing voluntary code of conduct more effective."

He confirmed that pub companies would be encouraged to provide more transparency to tenants and the possibility of a lease panel was likely to be one aspect of the review. The British Property Federation (BPF) has pledged to stop restrictions on businesses wanting to sublet unwanted space.

Last month Colin Wellstead, director at Christie & Co, welcomed the news from the BPF which said members should allow tenants to sublease at market rents.

He believes restrictions in leases have contributed to the difficulties some high street businesses have experienced in recent years, making it difficult to sell on the leases of some properties.

Many of the leases granted in the late 1990s, when the high street was a prime target for licensed operators, are no longer affordable as trading levels in some units have fallen.

• The BII is to introduce a lease code of practice accreditation programme. Under the scheme, which is currently in discussion, pub companies can have their leases accredited if they are legally sound. Each lease will receive a rating of Gold, Silver or Bronze.