RICS has launched a free small business retail lease to try and attract new and independent retailers. This lease is designed to provide jobs for people and help to support the independent retail sector. RICS have reached out to the independent trader and offered a simpler way of navigating the ‘costly and complicated’ process of obtaining their first commercial lease. The lease has been developed in collaboration with the British Retail Consortium (BRC) and authored by Nick Darby, SNR Denton UK LLP.
WHY NOW? “We hope to support SMEs and provide a boost to the British high street in a time of decline”
It has been devised to simplify the time-consuming process associated with commercial property leases. The new freely available contract is an advantage as it will stimulate the British high street at a time when latest figures from the BRC show more than 11% of town centre properties are currently standing vacant.
“In simplifying the leasing process for landlords and small business tenants, we hope to support SMEs and provide a boost to the British high street in a time of decline – thereby contributing to overall UK economic productivity. Moreover, by offering mutually beneficial terms to landlords and tenants in a flexible lease, we are directly addressing the principles of the Code for Leasing Business Premises – identified in the Portas Review as a key tool in tackling the high street’s decline.” Paul Bagust, RICS Associate Director
New lease will boost the opportunities for independent retailers
Independent retailers will benefit from the new lease as it will increase their opportunities to expand without the high costs. Landlords will benefit from rental income on a previously unoccupied space that can then re-establish its viability in the market place. For both parties the costs of a long lease negotiation process are significantly reduced.It offers entirely flexible terms for occupiers, including break clauses.
The lease takes the form of an easy-to-use eight page proforma, providing the tenant with fixed property costs and a clear picture of the responsibilities they are signing up to. Intended for leases of up to five years, it is a standalone short-term contract with no rent review.
In response to industry feedback, two versions of the lease have been developed, one with security of tenure under the Landlord and Tenant Act 1954 and one without. Under the Act tenants have the right to renewal of the lease. In circumstances where this may not be appropriate landlords should state at the start of negotiations that the protection of the 1954 Act is to be excluded and encourage tenants to seek early advice as to the implications.
Improving footfall on the suburban centre high street
This new lease will help small independent retailers as it has been designed to bring in new jobs for people; a new market could also boost how much consumers spend over this period. This could mean there will be an increase in retail expenditure. At the beginning of the year, 26% of retailers were at risk of failure. There is a need for a more flexible and affordable leasing process. There has been a decline in high street performance because retailers are unable to keep up with the expenses of the leases, therefore they are forced to close down. Authorities are seeking to be adaptable to changing economic circumstances through the planning regime – with the clearly articulated ambition of improving footfall on the a suburban centre high street through a more flexible approach to uses.
There are still risks involved that Independent Retailers must be mindful of
Although the new lease would be beneficial to many independent retailers, there are still risks involved. There has been a decline in high street performances because retailers are unable to keep up with the expenses of the leases, Some independent retailers may not be as successful as others therefore after a while they may not be able to pay the fixed costs of the lease, so as a result they could be forced to close down.
To sum up, it still appears that the benefits of this lease outweigh the risks, so if you are an independent retailer, this could be the a fantastic opportunity for a very successful future for your business.
This blog was written by Samantha Chadoka. Samantha is an 18 year old apprentice working toward an NVQ Level 3 in business and administration. Samantha works full time alongside Clare Rayner and her apprenticeship role is “Campaign coordinator” for the 2 Independent Retail campaigns – “An Independent Christmas and Independent Retailer Month”.