Commercial property jargon buster
Our A-Z of commercial property related jargon is designed to help you familiarise yourself with property terminology you might come across during the buying, selling, letting or renting process.
i.e. Assignment or Subletting
The ability of a business tenant to dispose of their lease which usually requires formal consent from the Landlord. Once a lease is transferred from one party to another the assignee or incoming tenant becomes responsible to the landlord for paying rent and fulfilling all other obligations under the lease. However, in the event of a default the landlord may be able to revert to the original assignor in the event of rent arrears or other liabilities.
The Association of Residential Lettings Agents (ARLA)
The Frost Partnership is an ARLA licensed letting agent. ARLA is the only professional body that is solely concerned with the regulation of Letting Agents, and for 25 years has been actively promoting the highest standards across every aspect of letting and management. ARLA member firms are required to work within the codes of practice, which cover the key stages of Letting and Management of property.
Landlords are responsible for dealing with asbestos on their property. Fines and imprisonment may ensue if the asbestos is not removed from the premises correctly.
Authorised guarantee agreement (AGA)
AGA is a common requirement on granting a lease. The outgoing tenant gives an AGA to the landlord if it assigns the lease, guaranteeing that the incoming tenant or assignee will pay the rent and observe the covenants specified under the lease.
A clause in a lease that provides either or both parties to have the ability for one or both parties to terminate the lease early on the service of notice.
A surveyor specialising in building surveys, preparation of schedules of condition or dilapidations and planned maintenance.
Business rates are a business tax for occupiers of non-domestic property. Collected and managed by the local council - business rates contribute towards the cost of local authority services. The Valuation Office Agency is responsible for assessing the rateable value of all non-domestic and business property in England and Wales.
Capital value is the value of an asset, freehold or leasehold, without including its annual or rental value and income.
Chartered surveyor is a general title for surveyors who have achieved the professional standards set out by the Royal Institution of Chartered Surveyors (RICS). Qualified to carry out a wide range of survey reports on buildings and land in the UK.
The completion date is the day on which money is transferred from the buyer's to the seller's solicitor. It is the date that the buyer becomes the legal owner of the new property.
Compulsory purchase is a forced sale to a government department or statutory authority.
Conveyancing is the administrative and legal side of buying or selling a property, when solicitors prepare title deeds and confirm ownership. Once an offer to purchase has been accepted, solicitors act on the behalf of the landlord or tenant to complete the conveyance procedure.
Covenants are clauses in an agreement that all parties in the agreement must adhere to.
Dilapidations and schedule of condition
A Dilapidation Schedule is a detailed report setting out the manner in which a tenant has failed to comply with their covenants to keep the property in full repair and condition. Schedules of Dilapidations can be carried out during the term of a lease and at expiry to ensure that the agreement and any applicable release of deposits can be dealt with promptly without delay.
A Schedule of Condition is a document which sets out a photographic and narrative description of the condition of a property at the outset of a lease in order to protect a tenant from unduly onerous repairing liabilities in the future.
A sum of money agreed between the parties and paid to the landlord or his agent by the tenant as security for the satisfactory completion of the tenancy, its terms and as a guarantee of performance.
Energy Performance Certificate (EPC)
EPCs assess the energy performance of a property by reviewing how the building is constructed, insulated, heated, ventilated and the types of fuel used which contributes to its carbon dioxide emissions. All commercial property that is either sold or let must have an Energy Performance Certificate (EPC) arranged by the landlord or managing agent prior to being marketed, let or sold. The Frost Partnership can arrange your EPC.
The Frost Partnership carries out expert witness reports for court purposes on property matters such as boundary disputes and valuation disagreements.
A full repairing and insuring lease (FRI) is when the cost of all repairs and insurance are borne by the business tenant.
GIA (Gross internal area)
The GIA refers to the total area within the perimeter walls of a property and makes no allowance for the space occupied by staircases, walls, etc. This measurement is the standard measurement given for industrial property.
A lease of the land only. Usually the land is leased for a relatively long period of time to a tenant that constructs a building on the property. A land lease separates ownership of the land from ownership of buildings and improvements constructed on the land.
A guarantor agrees to be responsible for a tenant’s obligations under a lease, should the tenant default.
Independent Estate Agents Group (IEAG)
IEAG is an association of leading independent Estate Agents and Chartered Surveyors from across the country, consisting of wholly independent firms with a long track record of providing a high quality multi-specialism professional service. The group provides an experienced voice within the estate agency profession providing integrity, guidance and help to members, practitioners and consumers.
Internal repairing lease (IR)
Under this type of lease the landlord retains responsibility for structural and external repairs without reimbursement. The tenant's only responsibility is to repair the inside of the let premises and contribute towards the maintenance of any common parts via a traditional service charge.
The landlord is the person who grants the lease or who has the right to enforce the terms of a lease. The landlord is also sometimes known as the “Lessor”.
The process of registering the legal title of an area of land with the Land Registry, typically handled by a solicitor.
Land Registry is a department within the government organisation that handles the registration of land titles in England and Wales.
A contractually binding agreement that grants a right to exclusive possession or use of property under mutually agreed terms and conditions between the landlord and tenant, usually in return for a periodic payment called rent.
Loan security valuations
When you need to borrow money, chartered surveyors can provide your bank with a property valuation.
A managing agent refers to the agent that has been instructed to oversee the property. Managing agents may have varying responsibilities, some include property maintenance management services, or others it is landlord and tenant services. The Frost Partnership offers a wide range of commercial property management services.
National Association of Estate Agents (NAEA)
NAEA is the UK's leading professional body for estate agency. Its international members are bound by strict rules of conduct to ensure they offer you the highest level of integrity and service, while the association's entry qualification means you can be sure you are dealing with an professional property agency. The Frost Partnership is a member.
NIA (Net internal area)
The NIA is defined as the usable space within the perimeter walls of a property. It excludes areas such as the space occupied by solid dividing walls, staircases etc. NIA is the standard figured quoted for office space.
Lease contracts generally contain clauses providing for a periodical review of the rent, at five yearly intervals for example. The lease will generally specify the basis of review, which may be to Market Value or by reference to an artificial means like the Retail Price Index (RPI).
A restrictive covenant in a lease simply restricts the tenant in some respect, for example a restrictive covenant in a shop lease might specify that only a particular type of trade may be carried out at the premises.
Royal Institution of Chartered Surveyors (RICS)
RICS is one of the most respected organisations in the UK for professionals involved in land, property, construction and associated environmental issues. RICS have around 100,000 qualified members in some 140 countries. The Frost Partnership surveyors are members of The Royal Institution of Chartered Surveyors (RICS), qualified to carry out reports and surveys on commercial property and land.
Service charges are paid by the owner and cover the cost of providing various services (i.e. maintenance and repair of the building and common parts, provision of heating, lighting and security).
Schedule of condition survey or report
A schedule of condition survey is generally commissioned before the signing of a lease in order to determine the condition of the building so that any existing defects and their repair costs are identified prior to committing to a law-abiding agreement to rent the property. The schedule of condition survey includes a report on the condition of the building together with notes concerning potential future defects that might need attention. Since commercial leases usually stipulate that the tenant is responsible for any repairs during and at the end of a tenancy, it is vital that tenants fully understand their potential liabilities before signing a lease.
Serviced office space
A variety of serviced office space and conventional office space offering highly equipped office space on flexible terms.
Stamp Duty Land Tax (SDLT)
Tax payable to the Government, which is calculated on the purchase price of a property. For commercial properties up to £150,000 there is no SDLT, for properties between £150,000 and £250,000 the SDLT is charged at 1%, for properties purchased between £250,000 and £500,000 the SDLT is calculated at 3% and for properties over £500,000 SDLT is calculated at 4% of the price.
Subletting is when the tenant lets part or all of the premises to a subtenant, as permitted by the terms of the lease. Subletting differs from assignment in that the head lessee remains responsible to the landlord for the payment of rent and fulfillment of other obligations.
Tenancy deposit scheme (TDS)
The Frost Partnership now registers all deposits held on behalf of tenancy agreements with the Tenancy Deposit Scheme (TDS). Designed to protect the tenant's deposit and the landlord's property during a lease term. A nominal administrative fee is required by both the tenant and landlord to apply for this scheme.
The tenant is the person who rents the property from the Landlord. Also referred to as ‘Lessee’ or even ‘leaseholder’.
Tenants in common
Where more than one party owns a property and each party has a specified share.
The term or lease period is the period of time the property is rented for.
The title deeds are documents demonstrating and outlining the legal ownership of a property.
If a property is under offer, the seller has accepted an offer from a buyer but not yet exchanged contracts.
The Town and Country Planning (Use Classes) Order 1987 as amended (the "UCO 1987") specifies uses of land and buildings into various “use class” categories. While some use classes can be converted to other use classes, others may require planning permission. Table 1. Commercial property use class. Table 2. Commercial property use class types that can be changed to accommodate other use class types without the need for planning permission.