Some British landlords are allowing tenants to sublet at any price in a move to head of new government rules on leasing. Jim Pickard reports

Landlords are set to make key concessions to business tenants in an effort to head off British government intervention in the leasing system.

Occupiers have complained bitterly that most landlords do not allow tenants to sublet space for less than they are paying for it.

When times are difficult and they want to reduce their operations, this proviso can hit retailers and other businesses hard.

But some of the country's biggest landlords had decided to end the practice, the British Property Federation said yesterday.

British Land, Land Securities, Prudential, Legal & General and Slough Estates are among those who have decided they will allow tenants to sublet at any price. The BPF hopes that other landlords will follow suit.

The move comes amid clashes between retailers and landlords and follows threats by ministers to ban certain leases. In particular, the government is considering barring leases that allow rents to be adjusted only upwards.

Last month a report by Reading University, commissioned by the office of the deputy prime minister, found evidence of improved flexibility in the market.

But it said almost all leases with rent reviews remained upward-only despite the introduction of a voluntary code to encourage landlord flexibility. Tenants were also unhappy about the restrictions on subletting. The British Retail Consortium yesterday warned that the BPF's subletting initiative would be impossible to enforce.

"This is not a solution to the deep-seated problems of flexibility in the property market," said Rachel Burns, assistant policy director at the BRC.

"When you look at the timing of this announcement, it is clearly intended to avert legislation." But Liz Peace, chief executive of the BPF, denied this. "What we've said to retailers is that we will do this anyway," she said. "You can still press for legislation if you like . . . but we hope this will help you."

Other attempts at conciliation announced by the BPF yesterday include the setting up of a forum for retailers and landlords to discuss issues.

The body may also establish a new kitemark-type scheme to accredit good landlords. Lastly, it is considering setting up a way to provide free advice about property to small businesses.

Martin Meech, property managing director at Dixons, said the proposals were welcome. But he added: "There is still a long way to go, as there are numerous issues to be resolved - in particular the process in which rents are reviewed."