Commercial property jargon buster
Whether you’re investing in a new development or looking to rent a unit for your business, there’s a lot of jargon to get your head around when you’re looking to buy or rent commercial property.
Here, we explain some of the key terms and legislation to help you on your journey.
This is a tax paid by occupiers of commercial property. The rates are set in a ratings list and reviewed every five years by the Valuation Office Agency. You can find out your rates by contacting your local authority.
A report by a building surveyor on the structural quality of a commercial building and any state of repair needed. Most lenders require this survey prior to agreeing a loan to help the tenant finance a property for their business.
This outlines the earliest point when a contract can be terminated.
An agreement in the lease giving obligations that all parties must adhere to.
A charge for the tenant that pays for the upkeep of the estate that the commercial property is situated on, such as security, landscaping, lighting etc.
Full Repairing and Insuring (FRI)
Many commercial leases include FRI making the tenant responsible for insuring the property and all repairs of the building (internal and external). Some leases put responsibility of external upkeep on the landlord, who will then recover those costs from the tenant via a service charge.
A tenant failing to comply with the repair, redecoration and upkeep of the property.
Commercial leases mostly give tenants the right to make changes or alterations to the property, but usually formal consent is be required from the landlord.
A lease is a binding contractual agreement between the landlord and the tenant and may be used to let a commercial property to a tenant for a certain number of years.
A review of the rent during the term of the least. This usually happens every five years and looks at the property value or Retail Price Index (RPI).
All commercial properties are given a use class, which specifies the type of business the building can be used for. Some classes can be converted to others easily, but some change of business use may require planning permission.
A restriction within the lease that outlines what the commercial property can be used for. It can be ‘open’ or ‘restrictive’ and is key when considering the property value and use.