Rack rent. The rent people would pay for the property if it was let today.
Open market rent. Much the same. It means the rent the landlord would get if he put the premises on the “open market”, in other words advertised it is as widely and openly as possible, not just to a small group.
Outside the act. This means that the landlord and tenant have “contracted out” of the Landlord and Tenant Act 1954. The 1954 Act gives tenants wide-ranging rights to renew their leases at the end of the original contractual term. But when that lease starts, the landlord and tenant can, if they wish, enter into an agreement saying that the rights of the 1954 Act will not apply to their lease. This is “contracting out” of the act. The lease is then described as being “outside the act”.
Inside the act. See “outside the act”. The lease is inside the act if no steps have been taken to dis-apply the rights to renew the lease contained in the Landlord and Tenant Act 1954 from the lease being created.
Lessor. The landlord, the person granting the lease.
Lessee. The tenant, the person taking the lease when it’s first created.
Assignor. Someone who is already a tenant of the premises and is assigning – passing ownership of – the lease of the premises to a new tenant.
Assignee. This is the person who takes over the lease of the premises from the existing tenant (the assignor).
Assignment. This is the transfer of ownership of a lease from the existing tenant to a new tenant (the assignee).
Underlease. A lease granted by the tenant. The person taking the underlease is an undertenant.
Sublease. It’s interchangeable with underlease. The person taking the sub-lease is a sub-tenant.
P.A or p.a. Short for “per annum”, which is Latin for “yearly” or “for a year”.
FRI lease. Short for full repairing and insuring. It’s shorthand for a lease where the tenants have to keep the premises fully in repair and insured against fire and other risks. It is also an FRI lease if instead of doing these things themselves, the tenants have to pay the landlords a service charge for repairing and insuring the premises. It’s not an FRI lease if there is no obligation on the tenants to carry out structural repairs and also no obligation to pay anything to the landlords for doing so, or for insuring the premises.
Internal repairing lease. This is the usual alternative to an FRI lease. It means that the tenant has to keep the interior of the premises in repair and decorated – for example, no further than the plaster – but has no responsibility for major works and repairs, and doesn’t have to pay the landlord a service charge for carrying them out either.
Dilapidations. The extent to which the premises fall short of the condition they are required to be in under the terms of the lease is called dilapidations. Dilapidations only covers failures of repair for which the tenant was responsible under the lease. Landlords may prepare a “schedule of dilapidations” – a complete list of them – as the first step as a claim for reimbursement from the tenants.
Forfeiture. The termination of the lease early by the landlord because the tenant has failed to comply with terms of the lease (usually for failure to pay rent).
Re-entry. One way in which the landlord can take back the premises and end the lease if the tenants have failed to pay rent, is by peaceably retaking possession, often by breaking in, usually with a bailiff.
Improvements. Improvements are a special kind of alterations. They are alterations which improve the property from the point of view of the tenant. The tenant has more rights to carry out improvements than any other alterations.
Permitted user. This is what the landlord says the premises can be used for. The permitted use may be quite widely expressed – for example “as a shop”. Or it may be very narrowly expressed – for example “as a shop for the sale of fruit and vegetables”.
Grant. As a verb it means “to grant a lease” or “to grant a right”. As a noun it means the lease or the right granted.
Demise. Landlords demise premises when they grant a lease of the premises. Demise as a noun means a letting. It’s just old-fashioned legal wording.
“Demised premises”. This means the property you are leasing and which you will be occupying. It’s a legalistic synonym for “the leased premises”.
“Subject to contract”. This is a legal expression, hallowed by long use, which means that nothing in the document it is part of is a legally binding agreement that anyone can enforce. It’s a way for everyone to be able to continue discussing things without having to be concerned that by some slip of the pen they’ve created a binding obligation. You often see it combined with “without prejudice”.
“Without prejudice”. This is legal shorthand for saying, “Everything in this communication is just between us, and can’t be used in court proceedings.” Whether it actually works in the particular case, depends on a lot of conditions. But people like to put it in important emails in the hope that it will save them from some future embarrassment or legal problem.
“Schedule of condition“. This is a description of the defects and wants of repair in premises, backed up by photographs, which prospective tenants might prepare for attachment to the lease as evidence of the state of repair of the premises at the date of the lease. This would be important if their repairing obligation is to keep the premises in the same state of repair and condition as they were in at the date the lease was signed.
“Head lease” and its family. When you have two or more leases on top of each other, the one at the very top (the one granted by the freeholder) is the “head lease”. The lease at the very bottom – the once with tenants carrying on a business – is the “occupational lease” and its owner is the “occupational tenant”. The head lease and any other leases are “superior leases” from the occupying tenants’ point of view. Leases in the middle – not the head lease and not the occupational lease – are called “intermediate leases”.