Commercial Property Management Flashcards

Under the Landlord and Tenant Act 1954, what statutory protection is afforded to business tenants at the end of their lease?

Answer: Security of tenure — the right to renew the lease on similar terms

Part II of the Landlord and Tenant Act 1954 grants business tenants security of tenure, entitling them to apply for a new lease on similar terms at expiry unless the landlord establishes a statutory ground for refusal.

What is an 'upward-only rent review' clause in a commercial lease?

Answer: A clause under which rent at review can only stay the same or increase, never fall below the passing rent

An upward-only rent review clause means that even if market rent has fallen, the passing rent is maintained as a floor and cannot be reduced at review.

What does a 'full repairing and insuring' (FRI) lease require of the tenant?

Answer: The tenant bears the full cost of all repairs and reimburses the landlord for building insurance premiums

Under an FRI lease, the tenant is responsible for all repairs (internal and external) and reimburses the landlord for building insurance, placing maximum property liability on the tenant.

What does 'tenant covenant strength' refer to in commercial property management?

Answer: The tenant's financial standing and ability to meet its lease obligations

Tenant covenant strength assesses the financial stability and creditworthiness of a tenant, directly affecting investment value as it indicates the security of the rental income stream.

What is a 'terminal schedule of dilapidations' in commercial property?

Answer: A document served by the landlord at or near lease expiry claiming remedies for the tenant's breach of repairing obligations

A terminal schedule of dilapidations is served by the landlord at or near lease expiry, setting out breaches of the tenant's repair, decoration, and reinstatement covenants and seeking financial compensation or execution of works.

What does 'WAULT' measure in commercial property portfolio management?

Answer: Weighted Average Unexpired Lease Term — the average remaining lease length across a portfolio weighted by rental income

WAULT (Weighted Average Unexpired Lease Term) averages remaining lease lengths weighted by rent passing, serving as a key metric for assessing the security and duration of a portfolio's income stream.

What is a 'sinking fund' in the context of commercial property service charges?

Answer: A fund accumulated over time from tenant contributions to meet anticipated future major capital expenditure

A sinking fund is built up through regular tenant contributions over the lease term to fund large future capital items such as roof replacement, avoiding the need for a single large one-off levy.