RICS draft professional statement - Code for leasing business premises in England and Wales, 1st edition

Code for leasing business premises in England and Wales, 1st edition

Part 4 Appendices

Appendix A Template heads of terms and checklist

This template should be read in conjunction with Part 1 of this document.

This template heads of terms mirrors the sections of the lease code. These items are also listed in the checklist that follows the template heads of terms, which can be used as an alternative. The checklist is likely to be a useful tool when a landlord or their agent wishes to use their own form of heads of terms document, and the checklist should then be used to ensure that at the very least the minimum information required by the lease code is being captured.

The items marked with an asterisk (*) must be included within the heads of terms in order to comply with paragraph 1.3 of the lease code.

1.0 Initial information

1.1 Type of lease

Head lease sublease

1.2 Landlord

[ ...................] (Registered no. [ ...................])

Registered office: ...................

Correspondence address: ...................

Contact name: ...................

Email: ...................

Telephone: ...................

Mobile: ...................

1.3 Tenant

[ ...................] (Registered no. [ ...................])

Registered office: ...................

Correspondence address: ...................

Contact name: ...................

Email: ...................

Telephone: ...................

Mobile: ...................

2.0 premises and rights

2.1 Description of the premises *

Detailed description, measured area and Land Registry compliant plan attached if available:

...........................................................................................................................

2.2 Rights *

Detailed description of any special rights being granted:

...........................................................................................................................

3.0 Length of term, renewal rights and break rights

3.1 Lease length and start date *

...... years and ...... months commencing on ...................

3.2 Landlord and Tenant 1954 Act protection *

Lease to benefit from the protection of the 1954 Act: Yes No

3.3 Options to renew

(a) Any option to renew: Yes No

(b) Notice period for exercising ...... months

(c) New term to be ...... years

(d) New rent to be ...........

(e) Details of any other terms ..................

3.4 Break rights *

(a) Any break rights: Yes No

(b) Notice period for exercising ...... months

(c) Single break date on ................... or at any time after ...................

(d) Break operable by: landlord tenant both

(e) Details of any break clause payments or pre-conditions ...................

4.0 Rent deposits and guarantees

4.1 Rent deposits *

(a) Rent deposit required: Yes No

(b) If yes, amount of rent deposit: £ ...................

(c) Period of time the deposit will be held ...................

(d) Deposit held as security for: rent all obligations

(e) Details of circumstances in which the deposit will be returned ...................

4.2 Guarantors *

(a) Guarantor required: Yes No

(b) If yes, identity of guarantor ...................

(c) Guarantor providing security for: rent or all obligations

(d) Details of circumstances in which the guarantor will be released ...................

5.0 Rent and rent review

5.1 Rent *

(a) £ ................... per annum exclusive of VAT

(b) Payment dates: monthly quarterly

5.2 VAT *

Will VAT be charged on the rent and other lease payments: Yes No

5.3 Rent free period (and other incentives) *

(a) Rent free period: Yes No

(b) If yes, length of rent-free period ...... months

(c) Details of any other incentives ...................

5.4 Rent reviews *

(a) The lease includes rent review provisions: Yes No

(b) Basis of review ...................

(c) Reviews every ...... years

6.0 Assigning, subletting, charging and sharing

6.1 Requirements before alienation can take place *

Prohibited

Consent not to be unreasonably withheld

Permitted without consent

Assignment of whole

Sublease whole

Sublease part

Sub-sublease

Concession

Group sharing

Charging

7.0 Services and service charge

7.1 Is a service charge payable? *

(a) Service charge payable: Yes No

(b) Proportion ...... % and estimate or actual annual charge £ ...................

(c) Any special or unusual provisions ...................

8.0 Repairs

8.1 Repairing responsibilities *

(a) Tenant repairs: whole building interior only or interior, windows and doors

(b) Landlord repairs structure and common parts

8.2 Schedule of condition

(a) Schedule of condition to be completed: Yes No

(b) Responsibility for cost of preparing this: landlord tenant

9.0 Use and alterations

9.1 Permitted use *

(a) Permitted use: ...................

(b) Limitations on changing use: ...................

9.2 Landlord's initial works *

(a) Landlord to undertake works: Yes No

(b) If yes, brief description of works ...................

(c) Long stop date by which works must be done ...................

(d) Specification agreed: Yes No

(e) If no, to be provided by: landlord tenant

9.3 Tenant's initial works *

(a) Tenant to undertake works: Yes No

(b) If yes, brief description of works ...................

(c) Long stop date by which works must be done ...................

(d) Specification agreed: Yes No

(e) If no, to be provided by: landlord tenant

9.4 Alterations *

Prohibited

Consent not to be unreasonably withheld

Permitted without consent

External structural

External non-structural

Internal structural

Internal non-structural

10.0 Insurance

10.1 Liability for insurance costs

(a) Landlord to insure the property: Yes No

(b) Premium to be recovered from tenant: Yes No

(b) Terrorism to be an insured risk: Yes No

(c) Mutual break clause for insured damage: Yes No

(d) Mutual break clause for uninsured damage: Yes No

11.0 Other issues

11.1 Rates and utilities

(a) Responsibility for paying business rates: landlord tenant

11.2 Legal costs

Each party to pay own including costs of approval for tenant's fit-out

11.3 Conditions

Completion of the lease conditional on:

(a) Board approvals

(b) Planning or other local authority consents

(c) References

(d) Superior landlord's consent

(e) Survey/schedule of condition

(f) Other please specify: ...................

12.0 Contact details

12.1 Landlord's solicitor

[ .......................... ]

Address: ...................

Contact name: ...................

email: ...................

Telephone: ...................

Mobile: ...................

12.2 Tenant's solicitor

[ ...................]

Address: ...................

Contact name: ...................

email: ...................

Telephone: ...................

Mobile: ...................

12.3 Landlord's agent

[ ...................]

Address: ...................

Contact name: ...................

email: ...................

Telephone: ...................

Mobile: ...................

12.4 Tenant's agent

[ ...................]

Address: ...................

Contact name: ...................

email: ...................

Telephone: ...................

Mobile: ...................

No contract

These heads of terms are subject to contract.

Minimum heads of terms checklist

As a minimum, written heads of terms must be produced that answer the following questions:

What is the extent of the premises?

Are any special rights being granted under the lease?

What is the duration of the lease?

When does the lease start?

Will the lease be protected by the 1954 Act?

Are there any break rights?

Will a rent deposit be required?

Will a guarantor be required?

How much is the annual rent?

On which dates will the rent be payable?

Will VAT be charged on the rent and other lease payments?

Is there a rent-free period or any other incentives?

What are the rent review dates and the basis for the reviews?

Can the tenant assign, sublet, charge or share occupation?

Will a service charge be payable?

Who has responsibility for repairing the premises?

What is the permitted use of the premises?

What rights does the tenant have to make alterations to the premises?

What initial works will the landlord be completing and when?

What initial works will the tenant be completing and when?

Who will be responsible for the cost of insuring the premises?