Alienation: Rights to dispose of a leasehold interest in land or property are described as alienation provisions. Usually a lease on a commercial building will permit assignment or subletting but dependant upon a raft of conditions being satisfied.
Assignment: The transfer of a lease from one party to the other. Once a lease has been assigned, the assignee becomes responsible to the landlord for paying the rent and fulfilling the other obligations of the lease. However, in the event of default, the landlord may be able to require the assignor to pay the rent.
Authorised guarantee agreement (AGA): A common requirement on granting a lease. The tenant gives an AGA if it assigns the lease, guaranteeing the assignee’s performance of the lease obligations given to the landlord.
Break clause: A clause in a lease giving either or both parties the right to terminate a lease in specified circumstances.
Brownfield land: Previously developed land.
Business rates: The way in which businesses and other occupiers of non-domestic property contribute towards the cost of local authority services.
Capital value: The value of an asset, freehold or leasehold, as distinct from its annual or rental value.
Covenant: The word is used in two senses: First, in the strict legal sense, it refers to a clause in the lease requiring the tenant (or landlord) to do something or to refrain from doing something. Second, it is used in the wider sense to denote the worth of a tenant and hence the risk of default, which will have a bearing on the value of the lease.
Demised premises: Premises which are the subject of a lease.
Dilapidations: This term principally covers proceedings whereby a landlord, by service of a ‘schedule of dilapidations’ seeks either to enforce a tenant’s repairing obligations under a lease of business premises, or claims compensation for lack of repair by the tenant at the end of the lease term.
Equivalent yield: The yield worked out on a discounted cash flow basis, taking into account initial and reversionary yields.
Freeholder: One holding an estate in “fee simple absolute in possession”.
FRI lease: A full repairing and insuring lease where the costs of all repairs and insurance are borne by the 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, WCs etc. This measurement is the standard measurement given for industrial property.
Greenfield land: Undeveloped land.