Zone A / ITZA. Zone A is the most valuable frontage zone of a conventional shop. ITZA means “in terms of Zone A”: floor areas are weighted to make differently shaped shops comparable. Zones are commonly 6.1 metres deep, but local conventions vary. A Zone A rental rate is not a rate applied indiscriminately to the entire floor area. VOA: shops and shopping centres
Turnover rent. Rent linked to an agreed definition of the occupier’s sales, sometimes alongside a base rent. Ask how online orders, delivery, click-and-collect, returns and VAT are treated, and what reporting and audit rights apply. Turnover is sales, not profit. RICS: turnover leases
FRI — full repairing and insuring. Describe the repairing and insurance liabilities in the lease. The landlord often arranges building insurance and recovers the cost. For a unit within a larger building, an effective FRI obligation can include recovery of shared repair costs through the service charge. It is not a blanket synonym for the US term “NNN”. RICS: lease terms
Service charge. The occupier’s contractual contribution towards shared services and relevant building or estate costs. Check the budget, apportionment, exclusions, any cap and reconciliation arrangements. Business rates and insurance are separate items unless the lease says otherwise. RICS: service charges in commercial property
Heads of terms. The agreed commercial outline used to instruct solicitors, normally marked “subject to contract”. Cover the demise, term, breaks, rent and reviews, incentives, repairs, service charge, insurance, permitted use, alterations, assignment, security and 1954 Act position. Avoid treating agreed heads as the completed lease. RICS: negotiating heads of terms
Inside or outside the 1954 Act. “Inside” means the tenancy benefits from the business-tenancy security-of-tenure regime, including a qualified right to renew. “Outside” means that protection has been validly contracted out; there is no statutory renewal right under that regime. Renewal inside the Act is not unconditional: landlords may oppose on statutory grounds. Government: renewing and ending business leases
Business rates. A tax on occupation of most non-domestic property, separate from rent. Estimate the bill from the rateable value and applicable multiplier, then account for reliefs and supplements. Rateable value is not the annual bill and need not equal the passing rent. Use the current valuation and local authority bill. Government: estimating business rates
Rent review. The contractual mechanism for resetting rent during the term. Establish the review dates, basis, assumptions and disregards, and any cap or collar. Passing rent, market rent and net effective rent are different measures. Upwards-only mechanisms are a live reform topic, as set out below. RICS: commercial property rent reviews