HC Deb 19 April 2000 vol 348 cc494-5W
Angela Smith

To ask the Secretary of State for the Environment, Transport and the Regions when he will announce the outcome of his Department's review of the property industry's Code of Practice on Commercial Property Leases; and if he will make a statement. [120069]

Mr. Raynsford

Research which I am publishing today shows that small business tenants still have little knowledge of property matters. I consider it essential that they should be properly informed, to enable them to get the best deals in the market rather than the standard packages still too often on offer.

I urge the industry and professions to join Government in ensuring that small businesses, and particularly those starting in business for the first time, have access to information about property arrangements. We will be making a contribution through the new Small Business Service, but I look to the industry and the professions to play their part.

We need to consider how Government, industry and the professions can be more proactive. It is not just a matter of providing information: we need to prompt those setting up in business to ask the right questions at the outset, to help them make the right choices, thus ensuring that their form of property occupation assists rather than hinders their business development.

The research, on the impact of the Code of Practice on Commercial Property Leases since its introduction in 1995, was carried out by Reading University and was designed to see how far the Code of Practice had brought about more flexibility in the commercial property market.

The findings show that while the Code itself has had little impact, the market is now granting much shorter leases and has become more transparent.

I am concerned that upward-only rent reviews still predominate in longer leases, and while I welcome the report's evidence of greater flexibility, I am disappointed that the Code of Practice has not had a greater influence.

To see if we can avoid regulating lease terms, I invite the industry and property professions to consider: the scope and contents of the Code of Practice; the arrangements for disseminating the Code and other forms of advice for tenants; how the market could promote alternatives to upward-only rent review clauses, ensuring that they are presented attractively while bearing the appropriate price tag; and how to promote a better understanding of the workings of dispute mechanisms; in particular, to encourage wider take-up of the special disputes resolution scheme for small businesses which the RICS introduced last year.

I will be asking the industry and professions to consider these points, as they digest the Reading University report, and I will invite them to discuss them with me at a forthcoming meeting of my Department's Property Industry Forum.