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 is an Energy Performance Certificate (EPC)?
EPCs are required when buildings are built, sold, or let. They rate energy efficiency from A (best) to G (worst) and include recommendations for improvements, along with cost and environmental impact assessments.
2) What is an estate charge?
This refers to the portion of a tenant’s service charge that covers the upkeep of shared estate areas, such as roads, landscaping, security, and lighting.
3) What are fit-out costs?
These are expenses incurred by tenants to adapt premises for their operational use. Fit out may include interior construction, furniture, cabling, and system installations.
4) What is freehold?
Freehold is the most complete form of property ownership (technically “fee simple absolute in possession”) with no time limit, unlike leasehold interests that are bound by a fixed term.
5) What is an FRI (Full Repairing and Insuring) Lease?
An FRI lease requires the tenant to maintain the premises and cover insurance costs. Sometimes the landlord pays upfront and recovers these costs through the service charge.
6) What is headline rent?
Headline rent is the stated rent level, excluding the effect of concessions like rent-free periods or capital contributions. It’s often used in market comparisons and as a basis for rent reviews.
7) What are heads of terms?
This is a non-binding agreement outlining the key terms of a property transaction. It ensures mutual understanding before legal documentation is drafted.
8) What is an incentive in a lease agreement?
A financial benefit offered to encourage tenants to enter into a lease, such as a rent-free period or contribution toward fit-out costs.
9) What is a lease?
A lease is a legally enforceable contract giving the tenant the right to occupy premises under agreed terms and conditions.
10) What is a lease term?
The lease term is the fixed period during which the lease remains in effect.
11) What is the legal term for the tenant?
The legal term for the tenant is lessee.
12) What is the legal term for the landlord?
The legal term for the landlord is lessor.
13) What is a letting agent?
A property professional (typically a surveyor) acting on behalf of a landlord to market and let premises. When acting for a tenant subletting, the agent becomes an intermediate landlord’s representative.
14) What is a Licence for Alterations / Licence to Alter?
A formal document issued by the landlord granting permission to the tenant to carry out specified alterations. It sets out conditions of the works, including obligations to reinstate at lease end.
15) What is a managing agent?
An individual or firm acting on behalf of a property owner to manage the building. Duties typically include rent collection, lease compliance monitoring, and coordination of repairs and services.
16) What is net effective rent?
This is the true rental value, calculated after accounting for lease incentives. It provides a realistic comparison of rent levels and is used in both negotiations and rate assessments.
17) What is net internal area (NIA)?
NIA refers to the usable internal space within a building, measured to the inside face of the external walls. It excludes areas such as stairwells, WCs, and plant rooms.
18) What is a raised floor?
A floor system commonly used in office buildings, raised above the structural slab to allow flexible installation of cabling and service access.
19) What is reinstatement in a lease context?
At lease expiry, tenants may be required to remove any alterations and return the premises to their original condition. This obligation is often detailed in the lease and in any Licence for Alterations.
20) What is a rent review?
A mechanism in leases (typically every five years) to update the rent to market level or in line with a specified index such as the RPI.
21) What are repair covenants?
Clauses in a lease specifying who, landlord or tenant, is responsible for carrying out repairs to the property.
22) What is a repair notice?
An interim schedule, often served during the lease term, that highlights repair obligations not being met by the tenant.
23) What is a reverse premium?
A payment made by the outgoing tenant to the incoming tenant as an inducement to take over the lease, opposite of a standard premium where value is received.
24) What is a schedule of condition?
A photographic or written record documenting the state of the premises at lease commencement. It helps limit the tenant’s repair liability by serving as a benchmark for future comparisons.
25) What is a service charge?
A fee paid by tenants to cover the cost of shared building services, such as cleaning, repairs, and management. Often collected quarterly, it may be capped or regulated by a Service Charge Code of Practice (e.g. from RICS).
26) What does 'subject to contract' mean?
A phrase used to confirm that negotiations are not legally binding until contracts are formally signed.
27) What is sub-letting?
Occurs when a tenant grants a lease of part or all of their space to another occupier for a period shorter than the remaining term of their own lease. If the sublease term matches or exceeds the superior lease term, it constitutes an assignment instead.
Need tailored advice beyond the definitions? Contact our Office & Business team for expert guidance.