If you are new to commercial property, there is a lot of jargon and technical language you will have to familiarise yourself with. Our commercial property jargon buster breaks down some of the most common terms and phrases to help you get a better understanding.
Absolute Title
This is the best type of title available, as it gives you complete right of ownership to the property.
Authorised Guarantee Agreement (AGA)
When a tenant leaving a property assigns the agreement to a new tenant (known as the assignee), the outgoing tenant may have to enter an AGA with the landlord. This effectively means the outgoing tenant becomes a guarantor for the new tenant, ensuring rent, damages etc. are all covered.
Agreement of Lease
An agreement of lease is a contract for grant of a lease in the future. This only will only be needed if certain obligations must be carried out by either party before completion.
Break Clause
This is part of most commercial contracts, giving the tenant the option to end the lease early by providing a written notice.
Business Rates
The local authority will provide a business tax rate for a commercial property. Business rates are used to ensure that businesses operating in the area contribute to local services.
Commercial Property Standard Enquiries (CPSE Enquiries)
CPSEs are raised to help the buyer have a better understanding of the property and the interest it is gaining. It can be used to help the deal reach a faster conclusion.
Commercial Property Valuation
To determine the value of the commercial property, it needs to be evaluated by an expert. This valuation will help determine how much it might be worth on the current market.
Covenant
A covenant is an agreement that lays out the obligations of the tenant and landlord during the lease.
Dilapidations
If a landlord makes a claim against the tenant for the cost of repairing any damage caused during the tenancy, this is referred to as dilapidations. The landlord could also request that the tenant pays for loss of rent that may occur while the repair works are carried out.
Demise
The landlord is the owner of the commercial building and the premises demised to the tenant is either a part or the whole of the property.
Enfranchisement
Under the Leasehold Reform, Housing and Urban Development Act 1993, leasehold property owners may be able to acquire the full freehold of the building as a group, along with the other leaseholders.
Heads of Terms
This is a document that features the lease agreement terms agreed between landlord and tenant. In most cases it is the landlord’s agent who prepares and negotiates these terms.
Rent Review
A commercial rent review takes place when the current rent being paid for the property is assessed. This means the rent amount can increase if it is felt the existing level is below current market values.
Schedule of Dilapidations
All outstanding maintenance and repair issues that have arisen during the tenant’s stay in the property are listed in a Schedule of Dilapidations.
Service Charge
A service charge is used by the landlord to cover the cost of repairing and maintaining the property as and when it is required.
Term
The length of time the tenant has been granted to rent the premises. This can vary from only 6 months through to a number of years.
Use Class
Depending on the type of businesses operating there, every commercial building is given its own use class category. Commercial properties that do not fall into established categories (nightclubs, theatres etc.) are classified as sui generis.
Commercial Property in North West London
If you’re looking to buy, sell, rent or lease commercial property in Willesden Green, Neasden, Dollis Hill or the surrounding areas, Regal Estates can help. Our commercial property experts can help you find the ideal commercial property for your business or help you source reliable tenants. Contact us today on 020 8459 2530 or email us.
