Repair—a practical lease negotiation guide

The following Property practice note provides comprehensive and up to date legal information covering:

  • Repair—a practical lease negotiation guide
  • Landlord’s repair objectives
  • Tenant’s repair objectives/Questions for tenants to ask about repairs at heads of terms stage
  • The importance of a tenant’s survey and due diligence
  • Agreements for lease where works are being carried out practical completion
  • Are the tenant’s repair objectives identical if the lease comprises whole or part?
  • Identifying the extent of the premises to be repaired by the tenant
  • ‘Good and substantial repair and condition’ — meaning
  • Repair distinguished from renewal
  • Including a requirement to keep in ‘good condition’
  • More...

Repair—a practical lease negotiation guide

Landlord’s repair objectives

The key aim for the landlord is to maintain the value of its investment by:

  1. ensuring that its property does not fall into disrepair and having an institutionally acceptable tenant's full repairing covenant and, if applicable, service charge in the lease

Tenant’s repair objectives/Questions for tenants to ask about repairs at heads of terms stage

The tenant is likely to find it difficult to convince the landlord to accept anything less than an obligation to keep the premises ‘in good and substantial repair and condition’ (or a similar variant of it) as this is the institutionally acceptable position; having a lease without it will affect the marketability of the landlord’s asset. The tenant may, however, be able to modify the clause if the premises are old or in poor condition, if the market is difficult, or if the term is very short (eg less than 3 years).

The heads of terms are likely to state simply that the lease will be ‘full repairing’ (also sometimes referred to as ‘FRI’ (full repairing and insuring), or (less commonly) ‘IRI’ (internal repairing and insuring) for a lease of part) unless a concession has been agreed by the landlord.

If any of the following points are relevant they should be raised by the tenant during negotiations for, and included within, the heads of terms:

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