Assignment
The transfer of a commercial lease from one party to another. An assignment is typically subject to the consent of the landlord who will wish to confirm the suitability of the tenant and the proposed business. A landlord will normally seek accounts and references from the proposed new tenant and may where appropriate seek guarantees and or a rent deposit
Authorised Guarantee Agreement (AGA)
This is a guarantee given by a Leaseholder to a Landlord when they assign their lease to a new tenant. The guarantee will last for the duration of the new tenant’s occupation of the premises or the remainder of the lease whichever is the shorter.
Assured Shorthold Tenancy (AST)
A Residential Tenancy Agreement between 6 months and 3 years in duration.
Break Clause
This is an option to end a lease by the landlord or the tenant contained in some lease. There are often conditions connected the right to end the lease, which may include; the service of notice in writing, giving up of occupation of the property, up to date payments of rent and sometimes payment in compensation to the landlord.
Duplex
A part of a building over two floors.
EX Act or Excluded from Security of Tenure
Some leases do not have the right to a new lease. These are known as excluded or EX Act leases. To be excluded the lease must specifically say so in the lease. The tenant is required to confirm that they understand this by signing a Statutory Decoration in front of a solicitor.
ITZA
An abbreviation of ‘In Terms of Zone A’. This is a method of calculating floor area of a shop. Different sections of the ground floor and any other floors are weighted to assist in valuation calculations.
Landlord & Tenant Act 1954 ( As Amended)
Among other matters this statue sets out the rights and obligations of a landlord and a tenant of a commercial premises seeking to renewal a new lease. The process allows either the landlord of the tenant to start the lease renewal process by giving notice to the other following the requirements set out in this Act.
This is a complex area of law if you have a lease renewal you should take advice from a surveyor and a solicitor.
Lease
This is a written agreement between a landlord and a tenant allowing the tenant to occupy a property for a fixed period of time. The lease will set out the rights and obligations of both the landlord and the tenant. A well drafted lease is a friend to both landlord and tenant as it will be clear to both parties what has been agreed and so avoids arguments and potentially expensive disputes.
License for Assignment
A document prepared by the landlord confirming the landlords agreement to the transfer of the lease from one party to another.
Lease Renewal
The renewal of a lease to an existing tenant. Unless specifically excluded in the lease the tenant in possession will have a right to renew the lease incorporating variations to the lease and a re-evaluation of the rent to the current market value.
Non Domestic Rates
This is a local tax paid to the local government.
Net Internal Area
This is the size of the property excluding pillars, toilets and fire corridors. When calculating areas we always follow the guidance of the RICS.
Ratable Value
The ratable value is used to calculate the rates payable. It is assessment on behalf of the Government by the Valuation Office and is based on the rental value of a premises at a particular date.
Rates Payable
This is the amount to be paid by the owner or occupier of a commercial premise and is assessed annually. The amount payable is calculated by multiplying the Uniform Business Rate (UBR) with the Ratable Value and applying various discounts. Which discounts or Relief as they are known depend on number of factors including the Ratable Value and who the tenant is.
Rent Review
Most commercial leases are for several years 5, 10 or longer depending on the needs of the landlord or tenant. A rent review adjusts the rent in line with the rent and the landlord would get if they were letting the property at the date of the rent review. The lease sets out how the rent is to be calculated with various assumptions and matters to be ignored. These aspects take careful analysis in order to get to the rent payable. An effective rent review surveyor will be able to interpret the lease clauses to best effect.
Rent Review Memoranda
Often referred to simply as a memoranda this is a document signed by both landlord and tenant recording the new rent. If you don’t have a memoranda and have reached a verbal agreement say for no change it may be open for the landlord to come back years later for the rent review and back date the rent to the original date.
Royal Institution of Chartered Surveyors ( RICS)
This is the governing body of Chartered Surveyors. The institute provided guidance to surveyors and members of the public as to how we carry out or work in a consistent and dependable manner.
Sub Lease or Under Letting
A lease/ tenancy granted by one tenant to another. In both cases landlords’ consent is required which should be in writing in a document known as a License to Sublet.
Subject To Contract
When a discussion or agreement is Subject To Contract it is not binding on either party until the contract is signed
Uniform Business Rate
This is a multiplier set by the Government in the budget for the calculation of the Rates Payable. It generally comprises a standard rate and a small business rate which gives a discount to business occupying small premises and only one premises.
Use Class
The use class determine what the property can be used for. There are various Use Classes, these are defined by the government and our updated periodically. The most recent change combines shops, restaurants, offices gyms and day nurseries into one category now know as Class ‘E’.
You can take a lease on a shop and use it for any of these business types provide you lease or your landlord agrees.