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The rental basis, the occupation costs and the lease structure. A practical reference for retail, restaurant and leisure property in London.
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.
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.
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.
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.
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” 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.
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 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.
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 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 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 is included solely to clarify the London usage; the legal and valuation concepts are not always equivalent.
| US expression | Use in London |
|---|---|
| NNN / triple net | Describe the FRI obligations, service charge, insurance and business rates separately. FRI is not an exact translation of NNN. |
| Percentage rent | Turnover rent; explain the base rent and turnover provisions. |
| CAM | Service charge; confirm the recoverable costs under the lease. |
| TI allowance | Landlord’s fit-out contribution / capital contribution; distinguish this from a rent-free incentive. |
| LOI | Heads of terms, normally subject to contract. |
| Broker / tenant rep | Property agent / occupier adviser; use “chartered surveyor” only where that qualification applies. |
| Mall / storefront / sidewalk | Shopping centre / shopfront / pavement. |
| Foot traffic / sales per square foot | Footfall / sales density; state the period and sales area basis. |
| Cap rate | Specify the relevant investment yield rather than assuming an identical calculation. |
| Concept | England and London | Commercial implication |
|---|---|---|
| Security of tenure | The Landlord and Tenant Act 1954 gives qualifying business tenants continuation and renewal rights, subject to statutory exceptions, unless formally contracted out. [1] | Establish whether the lease is inside or outside the Act; renewal rights affect control and value. |
| Repairs and exits | Full repairing and insuring (FRI) leases resemble net leases. Dilapidations cover repair and reinstatement. Break conditions and assignment guarantees can extend liability. [2] | Negotiate an incorporated schedule of condition; assess exit costs, break notices and continuing guarantees. |
| Rent reviews | Market reviews and indexation need separate modelling. A 2026 ban on upward-only reviews in qualifying future leases is enacted but awaits substantive commencement. Existing leases are not automatically rewritten. [3] | Model the actual review clause and distinguish current obligations from forthcoming reform. |
| Occupancy costs | Business rates are generally paid by the occupier; service charges broadly correspond to CAM. Assess VAT treatment and recovery, plus SDLT on qualifying lease rent and premiums. [4], [5], [6] | Underwrite rent, rates, service charge, insurance and transaction taxes separately. |
| Planning and use | Class E includes most shops, offices and dine-in restaurants. Changes within it are generally permitted, subject to conditions. Pubs, bars and hot-food takeaways sit outside Class E. [7] | Check planning status and the lease use clause; the intended format may require new consent. |
| Restaurant approvals | Planning, landlord consent and premises licensing are separate. Alcohol and generally hot food or drink served from 11pm to 5am require licensing. Extraction, noise and heritage controls also matter. [7], [8] | Confirm borough policy, permitted hours and fit-out approvals before committing to the site. |
| Transaction process | Heads of terms are the LOI equivalent and generally subject to contract. For acquisitions, exchange normally creates the binding commitment; completion is closing. [9] | Use solicitor-led diligence and document conditions, approvals and timing before commitment. |
| Business transfers | TUPE can transfer employees, employment terms and liabilities with a qualifying operating-business acquisition, including an asset deal. It can also affect outsourced property services. [10] | Include employment exposure when acquiring restaurants or retail businesses and changing service providers. |