IFRS 16 principles for UK real estate professionals

Please note, this was reissued in October 2022 as Practice Information. It was previously published as an Insight Paper in March 2022. No material changes have been made to the document. For more information on the document category changes, see the text part way down on this page.

IFRS 16 Leases is an International Financial Reporting Standard for lease accounting that came into force on 1 January 2019. It was introduced by the International Accounting Standards Board as a new accounting standard that sets out the principles for the recognition, measurement, presentation and disclosure of leases on balance sheets.

A key objective of IFRS 16 Leases is to ensure that companies report information for all of their leased assets in a standardised way and bring transparency on companies’ lease assets and liabilities.

IFRS 16 is an accounting standard and as such is predominantly the domain of accountants and finance teams. However, it is beneficial if real estate professionals are aware of the high-level principles of IFRS 16 and how this impacts on real estate leases. The subject matter is topical given the imminent implementation of the standard by the UK public sector.

This Practice Information paper was developed by a working group of expert valuers, accountants and other key stakeholders to explore the application of IFRS 16 Leases specifically from a UK-based real estate professional’s perspective, and in both its private sector and public sector application. As such, it refers to the views and opinions of that group as insight into this topic and its common practice only.