Speak the local property language

Use these terms in London retail and restaurant discussions. The legal points below concern England and Wales; business rates details concern England. Reviewed 18 September 2026.

The terms to know

Zone A / ITZA

Zone A is the most valuable front section used in shop rental zoning. ITZA means “in terms of Zone A”: deeper zones are converted to equivalent Zone A area. Apply the quoted £/sq ft Zone A rate to the appropriate ITZA area, not the total floor area. Zoning conventions vary; this atlas preserves each source’s stated basis, including CBRE’s 30 ft zones on specified streets.

Turnover rent

Rent linked to an agreed proportion of the occupier’s turnover, sometimes with a base rent. Define the sales included, online sales attribution, returns, reporting and audit rights. Turnover is sales revenue, not profit.

FRI — full repairing and insuring

A lease basis under which the tenant bears the agreed repair and insurance costs, directly or through landlord recovery. The landlord often arranges the building insurance. Check the demise, repairing covenant, schedule of condition and service charge: the initials alone do not define liability.

Service charge

The tenant’s contribution to landlord-provided services and common parts under the lease. Review the budget, apportionment, exclusions, reconciliation and any cap; distinguish it from rent, insurance and business rates.

Heads of terms

The principal commercial terms agreed before solicitors draft the lease, normally subject to contract. Record rent, incentives, term, breaks, reviews, repair, service charge and 1954 Act status. Identify any provisions intended to bind separately.

Inside / outside the 1954 Act

“Inside” means the business tenancy has security of tenure under Part II of the Landlord and Tenant Act 1954: statutory continuation and renewal rights, subject to the landlord’s statutory grounds of opposition. “Outside” usually means validly contracted out using the required warning notice and declaration procedure before commitment. There is then no statutory renewal right; check any contractual option.

Business rates

A separate non-domestic property tax, usually paid by the occupier. Rateable value is not the rates bill or the passing rent. Estimate the bill using the relevant multiplier, reliefs and transitional arrangements. England’s 2026 rating list took effect on 1 April 2026; check the current assessment and eligibility rather than carrying forward last year’s bill.

Passing rent / headline rent / net effective rent

Passing rent is the rent currently payable. Headline rent is the stated rent before adjusting for incentives. Net effective rent reflects incentives over an explicitly stated period and calculation basis. Specify rent-free periods, capital contributions and the treatment of breaks before comparing deals.

Rent review / break clause / lease renewal

A review resets rent under the lease mechanism. A break can end the lease early if its notice and conditions are met. A renewal grants a new lease. These are different events; establish their dates and interaction.

Fit-out / dilapidations / alienation

Fit-out means preparing the premises for occupation. Dilapidations are breaches of lease obligations concerning the property’s condition, often addressed at lease expiry. Alienation covers dealings such as assignment and underletting; check consent requirements and guarantees.

Covenant strength / yield

Covenant strength concerns the tenant’s ability to meet its obligations, including the support of any guarantor. For investment comparisons, state the yield basis — for example net initial yield or equivalent yield — and the treatment of purchaser’s costs, incentives and rental growth.

US shorthand → London wording

US expressions appear here only to explain the translation. “Real estate”, “store” and “leasing” also occur in UK practice; company names and publication titles remain unchanged.

What the rent-review reform means

Once commenced, the ban will apply to qualifying new business tenancies and renewals in England and Wales, including contracted-out leases. Existing leases are generally unaffected. The legislation targets upwards-only outcomes where reviewed rent depends on a variable reference such as market rent, an index or turnover; it does not simply prohibit every fixed stepped increase.

Pre-commencement arrangements have transitional protection, with special rules for tenancy renewal arrangements entered into on or after 17 March 2026. Check the agreement date, grant date and renewal provisions with the solicitor. Contracting out of security of tenure does not by itself avoid the rent-review rules.

Interview discussion: consider how two-way reviews could affect income assumptions, incentives, lease length and negotiations. Those are commercial questions, not established market outcomes. Separately, the Law Commission’s second consultation on 1954 Act reform closed on 16 September 2026; proposals are not enacted changes.

A useful question in the room

“What is the rent basis and net effective rent after incentives? Is the lease FRI, what are the service charge and business rates, is it inside or outside the 1954 Act, and how are the break and rent-review provisions reflected in the heads of terms?”

Evidence and further reading

• RICS: lease terminology and heads of terms
• GOV.UK: business lease renewal
• GOV.UK: estimating business rates and 2026 revaluation
• 2026 Act: explanatory notes and September 2026 rent-review briefing
• Law Commission: business tenancies reform