March 2, 2005—A two-year study into commercial property leases shows that they are becoming shorter and more flexible, with upward-only reviews found in less than half of all deals.
A team from the University of Reading, working for the Office of the Deputy Prime Minister, found increased flexibility in significant aspects of leases such as length, repairing covenants and the operation and timing of tenants break clauses, but say other clauses such as assignment and subletting restrictions have not changed much.
The research also found that the upward only form of review still dominates the UK commercial leasing market, but, because of the fall in lease lengths, the number of leases that have no reviews within them has increased and now accounts for over half of all leases.
The study reflects government concern that business tenants were not being offered sufficient choice and flexibility in lease terms. The Reading team notes that the debate over commercial leasing has polarized the industry, with landlords attempting to persuade government not to legislate while tenants are arguing for intervention.
For more on the report, see the Web site of the University of Reading.
