Most property occupiers do not want the government to legislate on lease code

Two-thirds of corporate property occupiers are opposed to legislation to make the Code for Leasing Business Premises1 mandatory, preferring self-regulation, according to the CBI and property adviser GVA Grimley's 'Property and the Boardroom'.

The report reveals that opposition to legislation is highest among smaller firms, at 83 per cent.

The code aims to promote fairness in commercial leases and ensure business occupiers have the information necessary to negotiate the best deal available to them. It was written earlier this year by business and property groups and is being given time to work by the Government before it considers whether further legislation is necessary.

Corporate occupiers are not making the best use of flexibility in their leases, according to the survey, with three-quarters of companies exercising less than one quarter of breaks. This increases to 84 per cent of small firms. A high proportion of leases are being renewed: 65 per cent of firms renew over half of their leases.

Howard Cooke, Partner at GVA Grimley said: "The business environment is volatile and having the flexibility to end leases reduces the cost of decisions that have to be made when a business needs to change its property portfolio. If landlords and occupiers continue to work together in a constructive way, legislation on leases should not be necessary.

"A lack of understanding between landlord and tenant of the other's position is often the cause of disputes, which the code of conduct should help to improve - but both sides need to adopt a less adversarial approach."

Three-quarters of businesses reported in the survey that they do hold an annual strategic review of their property holdings.

Karen Dee, the CBI's Head of Planning and Infrastructure said: "The survey shows many boardrooms do understand the importance of property to their business, with the majority of companies reviewing their property strategy on an annual basis. But property occupiers, who strongly endorse the code for leasing business premises, could make more of their flexible leases. "

Other key findings:

57% want to see the end of the upwards-only rent review
71% of all firms want to see continuing liability post assignment to be removed