Navigating the office and business property market often involves specialist terminology. To support clarity and confidence, we’ve compiled a glossary of commonly used terms in office agency, leasing, and investment.
This resource is designed to help landlords, occupiers, and investors quickly understand key definitions, ensuring you make informed decisions at every stage of the property lifecycle.
1) What are alterations in the context of a lease?
Alterations are works carried out by the tenant that physically change, divide, relocate, or modify the leased premises. These can involve changes to the building’s structure, internal partitions, mechanical and electrical systems, or surface finishes.
2) What does an assignment refer to in a lease agreement?
An assignment refers to the transfer or sale of the tenant’s entire interest in the lease to a new party (the assignee), for the remainder of the lease term.
3) What is an Authorised Guarantee Agreement (AGA)?
Introduced under the Landlord and Tenant (Covenants) Act 1995, an AGA is an agreement whereby the outgoing tenant guarantees the performance of the lease obligations by the incoming tenant after an assignment. The outgoing tenant acts as a guarantor for the assignee.
4) Can you explain what a break clause is?
A break clause (also referred to as a ‘break option’ or ‘option to determine’) is a provision in a lease allowing either party, landlord or tenant, to end the lease early, subject to meeting certain conditions.
5) What is a break notice?
A break notice is a formal declaration by either the landlord or tenant indicating their intent to exercise a break clause. To be valid, the notice must comply with strict requirements, such as serving it within a specified timeframe and fulfilling any pre-conditions.
6) What does BREEAM stand for and what does it assess?
BREEAM (Building Research Establishment Environmental Assessment Method) is an internationally recognised environmental assessment and rating system for buildings. It evaluates factors such as energy efficiency, water usage, indoor environmental quality, transport, materials, and waste management to assess the sustainability performance of a building.
7) What is building insurance and who typically pays for it?
Building insurance covers the landlord against risks such as structural damage, destruction, or loss of rental income. Typically, the premium is recharged to the tenant.
8) What is a building survey?
A building survey is a detailed report produced by a surveyor that assesses a building’s structural condition and state of repair. It includes evaluations of defects, the integrity of fixtures and fittings, and service installations. Often required by lenders as part of due diligence for secured lending.
9) What are business rates?
Business rates are a government tax applied to the occupation of non-residential property. Valuations are maintained by the Valuation Office Agency and are reviewed periodically, usually every five years.
10) What is a CAT A fit-out?
A Category A (CAT A) fit-out is the landlord’s base build finish, providing a functional but uncustomised space. It typically includes raised floors, suspended ceilings, lighting, HVAC, and basic finishes, offering tenants a “blank canvas” to fit out according to their requirements.
11) What is the difference between CAT A+ and CAT B fit outs?
CAT A+ offers more than a standard CAT A finish, including ready-to-use features such as meeting rooms, kitchens, furniture, and IT infrastructure. It provides a “plug and play” space suitable for immediate occupation, though without the tenant’s specific branding or bespoke design. On the other hand, a CAT B fit-out delivers a fully operational and tailored workspace. It includes internal partitions, bespoke furniture, branded design elements, enhanced lighting, and technical systems such as IT and AV, all configured to suit the tenant’s operational and branding needs.
12) What is Capex (Capital Expenditure)?
Capital expenditure refers to the investment made to acquire, upgrade, or improve physical assets like property, buildings, or equipment.
13) What are dilapidations in a lease context?
Dilapidations are breaches of a tenant’s lease obligations regarding repair, reinstatement, or redecoration. Claims can arise during the lease (interim) or at expiry (terminal), with repair claims often capped by the Diminution in Value rule under Section 18 of the Landlord and Tenant Act 1927.
14) What is disrepair?
Disrepair is the condition where a property fails to meet required standards of maintenance. Tenants are often obliged to keep premises in good repair; failure to do so can result in claims or penalties.
15) What are empty rates?
Since 2008, full business rates generally apply to vacant commercial and industrial properties, subject to limited exceptions. This policy has been criticised for discouraging property regeneration.
Need tailored advice beyond the definitions? Contact our Office & Business team for expert guidance.