- Break clause
- Break notice
- Business rates
- Service charge
- Subject to contract
- Use class
- Yielding up
Alienation is the official term for the transfer of property and possession of lands, or other things, from one person to another. An alienation clause within a lease or licence refers to a tenant’s ability to sublet, assign or share occupation.
Contracts often mention alterations, which refer to how much a tenant can modify the premises. For instance, a tenant may want to add partition walls or redecorate their office space. However, nearly all leases or licences require a tenant to return the premises to their original condition, and structural alterations are largely prohibited.
An assignment is the transfer of an existing contract to a third party. Assignments remove the management burden that occurs with sub-letting office space, as the incoming tenant (assignee) contracts directly with the landlord. However, unlike sub-letting, in the majority of cases, a tenant cannot assign only part of their premises.
Before assigning a lease, it’s important to check your contract and seek the landlord’s written approval. If needed, Hubble’s tenant advisors can provide assistance.
Whether you have a lease or a licence on a property, the contract will typically last for a specified period of time. The easiest way to ascertain flexibility is via a ‘break clause’, which allows a tenant to terminate a contract prior to the expiry of the term. Note that break clauses are not a given and must be negotiated.
In order to exercise a break clause, certain conditions must be met. Most require a landlord or tenant to provide between 3 and 12 months written notice. In addition, other provisions such as the outgoings due under the contract (including the rent, service charge etc.) must be paid in full, and the premises must be vacated.
BREEAM stands for Building Research Establishment Environmental Assessment Method, and assesses the sustainability of buildings against a range of social and environmental criteria.
Business rates are effectively council tax for commercial property. The majority of commercial property contracts require the tenant to pay business rates, and they typically amount to around a third of the rent.
To find out what the business rates are for a particular property, visit the gov.uk page “Find and check your business rates valuation”.
The demise is the physical area occupied by a tenant under a lease, for which they are legally responsible.
A tenant’s ‘dilapidations liability’ is their requirement to return the premises to the condition in which they were found. This typically includes removing all furniture and any partitioning installed, and redecorating.
An Energy Performance Certificate (EPC) rates how energy efficient a building is. It’s graded from A to G (with ‘A’ being the most efficient) and can indicate how your running costs will be affected. In fact, from 1st April 2018 offices and other commercial property with an EPC rating of an “F” or a “G” will be unsaleable.
For more information on the new regulations, read here.
Incentives are offered to occupiers to encourage them to enter into a lease. This is often an initial rent-free period, or a cash contribution to fit out the place. The level of incentive granted by a landlord or existing tenant is dictated by market conditions.
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Net internal area (NIA), effectively the usable floor area, is the total floor area available in a property minus that taken up by lobbies, columns, mechanical and electrical services, lifts, toilet areas etc.
A lease commits an occupier to space for a specific term, a payable rent, and exclusive occupation. A lease cannot easily be terminated until it expires (unless there is a break clause, see above). Usually, specialist advice is needed throughout the process to ensure that the best terms are negotiated for the tenant. The Hubble tenant advisory team provides this service free of charge.
Further information on leasing premises is available here.
A licence is an agreement which allows a tenant to occupy space for a flexible amount of time. A licence is short and can be drawn up and committed to quickly. Typically licences are agreed for serviced offices or when renting spare desks or offices within someone else’s space.
For more information on the difference between a lease and a licence, read our guide here.
A rent-free period is as it sounds: a period where the occupier does not pay rent. This is generally provided as an incentive for a prospective occupier to enter into the lease or a licence.
Sometimes landlords need to charge an extra fee which covers the maintenance, repair and general upkeep of the the areas not directly included in your office. This may include a number of things such as the cost of a receptionist, major repairs to lifts, refuse collection, and security.
Sometimes known as under-letting, this is where a tenant acts as a landlord and grants another company occupation over part or all of a space, for either a short or long period of time. Consent must be gained from the landlord before granting a sub-lease. You’ll need to check the terms of your contract before you enter into any deals of this type.
If you’re interested in subletting your office, please consult a member of our Tenant Advisory Team for an initial free consultation.
Subject to contract
Once an offer on a property has been accepted by a seller, it is considered ‘subject to contract’ (STC). This means that although the offer has been accepted, the paperwork is not yet complete. No money has changed hands yet and nothing is legally binding until the occupier signs the official documents.
All commercial property is given a use class, unless it is classified as sui generis – i.e. it doesn’t fall into any of the established categories, such as a theatre or nightclub. The vast majority of commercial office space falls under the “B1” user clause.
For more information on planning use classes, read the legislation.gov.uk document on use classes.
“Yielding up” is the tenant’s obligation to return the property to the landlord in the condition in which they found them. Dilapidations are the works that are carried out in order to “yield up” the property.