EAMONN MAGUIRE and BRIAN MELDON introduce the SCSI’s new Business Leasing Code for Landlords and Tenants.
This year’s Web Summit will probably be remembered for the heated row that took place between Government and the organisers of the event following the relocation of next year’s Summit to Lisbon. However, despite all the negative publicity, it should be remembered that on the first day of the Web Summit 320 jobs were created by start-up companies. Indeed, Ireland has developed a reputation for its vibrant start-up community. In 2014, almost 18,000 new start-ups were formed, which is the highest figure in new start-up formations since 2007. As the Irish economy continues to stabilise and grow, and as business confidence continues to improve as a result, the rate of new start-up formations is likely to increase in the coming years.
A model Heads of Terms has also been provided, setting out a detailed list of the main points that should be included in a commercial lease.
Addressing a need
Despite all the positive media coverage surrounding start-ups, little attention is paid to the difficulties experienced by many entrepreneurs in setting up a company. Part of this process involves the search for new premises, and many entrepreneurs are unaware of the complexities of the property market, particularly in relation to the leasing of commercial premises. In the context of the increasing number of start-ups in Ireland, it is important that these businesses have a clear, concise and authoritative source of information to guide them through the process of leasing commercial premises. The SCSI has long recognised a need to increase awareness of property issues, especially among start-up companies. In response to this issue, the SCSI Commercial Agency Professional Group has produced The Business Leasing Code for Landlords and Tenants, which was adapted from the RICS Code for Leasing Business Premises in England and Wales 2007.
The Business Leasing Code for Landlords and Tenants has been produced for use by landlords, as well as current and prospective occupiers, as an introduction to the issues that are relevant in leasing a business premises, while also promoting fairness and transparency in the negotiating and constructing of commercial leases. The Code forms a step-by-step guide to leasing a commercial property, starting with an explanation of “the demised premises”, rent reviews, insurance obligations, repairs, sub-lettings and assignments, as well as recommendations on handling negotiations.
The publication of this Code is one step towards raising professional standards in the process of leasing a commercial premises. The SCSI will also endeavour to influence other stakeholders in the leasing market to endorse this Code so that it becomes the widely accepted practice standard for all parties
The Code also reminds tenants of their statutory obligation to register the details of all commercial lease transactions with the PSRA Commercial Leases Register. The SCSI acknowledges the work of Government in introducing the Commercial Leases Register, which is a statutory source of information that will significantly improve transparency in the property sector. A model Heads of Terms has also been provided, setting out a detailed list of the main points that should be included in a commercial lease. Some of these issues might not be at the forefront of an occupier’s mind when entering into a lease, but may affect their ability to manage their business in or from the property. The Heads of Terms are in an interactive format, enabling either party, or indeed both parties should they wish, to enter the terms of agreement online. The model Heads of Terms will also act as a checklist for lease and lease renewal negotiations. It is expected that this will speed up the transaction process, resulting in benefits to both owner and occupier. In all, the Code ensures that both landlords and tenants of business premises have a framework, enabling them to negotiate in a fair and transparent manner.
The Code also reminds tenants of their statutory obligation to register the details of all commercial lease transactions with the PSRA Commercial Leases Register.
This Code is designed to help both small and large business owners to manage their property efficiently and run their businesses more profitably. Many of the topics included here can be highly complex and a guide such as this can only provide an outline of the key points. It should also help landlords and tenants to appreciate when they need to seek a professional adviser. This guide will give them the necessary background so that they know what to ask their professional adviser and understand more fully the information and advice that is given. One of the SCSI’s strategic objectives is to promote and advance standards across the industry.
The publication of this Code is one step towards raising professional standards in the process of leasing a commercial premises. The SCSI will also endeavour to influence other stakeholders in the leasing market to endorse this Code so that it becomes the widely accepted practice standard for all parties involved in the leasing process.
The first phase of launching the Code is to educate the Society’s own members. While a CPD event has been organised, the SCSI will be launching a broader marketing campaign to encourage surveyors to promote the Code to their clients.
As the economic outlook improves, ensuring that companies can expand and create jobs is a high priority for the SCSI. It is hoped that the Code will demystify the letting process so that decisions in relation to leasing a commercial premises will become much clearer, which in turn will ensure that entrepreneurs are focused on making a success of their business.
General practice Chartered Surveyor and member of the NPC Partnership.
MSCS MRICS ACIArb. Principal Partner at Meldon Chartered Surveyors.