Alienation: The ability for the office to be sub-let or for the lease to be transferred or assigned.
Annual running costs: Rent, business rates, service charge and building insurance premium for the duration of the lease, subject to any rent-free period that can be negotiated. Where the landlord has elected the property for value-added tax, VAT will be payable on the rent and service charge.
Capital costs: Fitting-out costs, i.e. the installation of kitchen facilities and partitioning to create a meeting room(s), office furniture, data/telecoms cabling, solicitor’s building surveyors and property consultancy fees and a rent deposit (where requested by the landlord).
Exit costs: The obligation at the end of the lease to return the office in a full state of repair, re-carpeted, re-decorated, including the removal of the fitting out works such as partitioning and kitchen facilities.
Legal fees: It is usual for the landlord and the tenant to each bear their legal fees.
Re-instatement: The tenant’s obligations to maintain the premises for the duration of the lease and remove the tenant’s fitting-out works.
Rent: Typically listed as an annual figure or as “pounds per square foot per annum”, exclusive of VAT, business rates, service charge and buildings insurance.
Rent-free period: It may be possible to negotiate a rent-free period depending on the prevailing market conditions, the length or value of which will be influenced by the length of lease and serving of any landlord or tenant break options.
Rent review: There may be a provision for the rent to be reviewed during the third or fifth year.
Service charge: Where a building is multi-tenanted, typically the tenants will pay a service charge to cover the costs incurred by the landlord in repairing and maintaining the common parts and exterior of the building. Where an entire building is leased by a single tenant, the tenant may be directly liable for all the repair and maintenance costs, both internal and external, so a service charge may not apply.