Glossary of Terms
A brief guide to help you understand some of the common terminology you might encounter, when searching for office space.
This is an abbreviation for Authorised Guarantee Agreement. It is commonplace for Leases to insist on an Authorised Guarantee Agreement when assigning the Lease from one occupier to another making the previous owner of the lease financially liable if the new occupier defaults.
This is the technical term which covers either the lease assignment or sub-letting of an existing lease.
This is the transfer of the Leasehold interest whereby the existing Tenant steps away from the transaction and the new tenant takes over a direct contract with the Landlord.
Each property has a planning use as set out in the Use Classes Order. The code for office use is B1.
Also known as an Option to Determine – This can be Landlord bias, Tenant bias or be mutual. It is common practice that there is a notice period that would need to be given in writing prior to the break option date.
Commonly abbreviated to “Cat A” – This is the term given to the internal arrangement of an office building prior to receiving a occupiers fit-out. A Cat A specification would include a floor (where a raised floor is provided), ceiling, lighting, air conditioning (where provided) and items installed such as lifts and WC’s.
Commonly abbreviated to “Cat B” – This is the technical name given to an occupier fit-out/build-out. This would include divisional walls, meeting rooms, reception area, kitchen area and any other modification required as part of the built-out.
At the end of a Lease the Tenant is usually obliged to reinstate the premises into the condition, either as they took it or as described in the Lease. Any building works to achieve this are known as dilapidations.
FULL REPAIRING LEASE
Also abbreviated to FR&I – This is a typical lease structure for a self-contained building or an “effective Full Repairing Lease” by way of the Service Charge in a multi-occupied building. This means that the Tenant is responsible, either solely or collectively (where multi-tenanted), for the exterior repairs to the building.
This is the term given for newly constructed or refurbished accommodation, which is built to a high specification, but is frequently confused with Category A.
LANDLORD & TENANT ACT 1954, PART II (AS AMENDED)
This Statute covers the Security of Tenure and Compensation Provisions for tenants. It provides a court procedure for the renewal of leases and sets out compensation provisions in the event that leases are not renewed.
This is the name given to a Tenant. Typically used in a sub-letting context.
This is the name given to an occupier who is a Tenant, but also a Landlord. Typically used in a sub-letting context.
“OUTSIDE THE ACT”
This is the common phrase which refers to a lease not being covered by the 1954 Landlord & Tenant Act. This means that there is no automatic right of renewal of the lease – it is only by mutual agreement and the occupier is not eligible for compensation.
This stands for Per Annum Exclusive. This is displayed after a rent amount and means that the rent stated is excluding business rates, service charge, insurance and/or VAT.
This is the term given to a transaction where a Contract agreeing to lease the premises is taken during the refurbishment or construction phase of the property. An “off-plan” pre-let is when a building construction is only started once a Tenant has contracted to take a lease on the property.
This means Per Square Foot and is the traditional measurement of annual rent.
It is common for rents to be described as a flat monetary value. Example: £40.00psf. This means the rental is £40.00 per square foot per annum, exclusive of rates and service charge. Despite the introduction of metric sizes, the office leasing market still works on an imperial basis.
SCHEDULE OF CONDITION
This is a document which is used to demonstrate the state of repair at the start of the Lease. It is common for it to be photographically based and is used at the end of the Lease when agreeing dilapidations with the Landlord.
SHELL & CORE
This is the term given to offices which have not received a Category A finish by the Developer. The units typically will have concrete floors, walls and ceiling with no lighting, electricity, air conditioning or services installed.
Also sometimes known as Under-Letting – This is where the current occupier acts as an intermediate Landlord and brings in a Tenant that pay them rent which they in turn then pay the Landlord.