--- title: "Decoding a London lease: FRI, dilapidations, break clauses" description: "A practical primer on UK commercial leases for international tenants — the terms that matter and the traps to avoid." canonical: https://classa.info/guides/uk-lease-glossary-fri-explained pageType: guide lastUpdated: 2026-04-01T00:00:00.000Z license: "CC BY 4.0 with attribution to Class A Atlas (https://classa.info)." --- > FRI shifts repair, insurance, and service charge to the tenant — model it explicitly. ## TL;DR - FRI shifts repair, insurance, and service charge to the tenant — model it explicitly. - Break clauses are heavily litigated — vacant possession is the single most-failed condition. - Dilapidations at lease end are commonly £35-£75/sqft on a high-end fit-out. - Business rates are statutory and are not the same as the service charge. - Rent reviews are typically open-market every 5 years — and they are upward-only. # Decoding a London lease: FRI, dilapidations, break clauses By The [Class A](/glossary/class-a) Atlas Editorial Desk · 2025-09-01T00:00:00.000Z · 12 min read **A practical primer on UK commercial leases for international tenants — the terms that matter and the traps to avoid.** ## TL;DR - FRI shifts repair, insurance, and [service charge](/glossary/service-charge) to the tenant — model it explicitly. - Break clauses are heavily litigated — vacant possession is the single most-failed condition. - [Dilapidations](/glossary/dilapidations) at lease end are commonly £35-£75/sqft on a high-end [fit-out](/topics/fit-out-capex)">fit-out. - [Business rates](/glossary/business-rates) are statutory and are not the same as the service charge. - Rent reviews are typically open-market every 5 years — and they are upward-only. ## What FRI actually means Full Repairing and Insuring is the dominant lease structure for UK Class A office. Under FRI, the tenant takes responsibility for: (a) the cost of internal repair and decoration, (b) reimbursement of the landlord's building insurance, and (c) a proportional share of building maintenance via the service charge. For a multi-tenant office, the tenant's repair obligation is typically limited to the demised premises — not the structure or the common parts. A [Schedule of Condition](/glossary/schedule-of-condition) appended to the lease can cap the repair obligation at the standard recorded on lease commencement; on older buildings this is essential. ## Break clauses — the conditions are everything A 10-year FRI lease with a tenant break at year 5 is the standard institutional structure. The break itself is straightforward; the conditions are where most disputes arise. The four common conditions are: (1) **vacant possession** — the premises must be returned with no occupiers, no goods, and no chattels; (2) **no material breach** — all covenants must be performed; (3) **all rent paid** — no arrears at the break date; (4) **service notice** — typically 6 months' written notice in a specified form. Vacant possession is the most-litigated condition. It has been held to be breached by leaving partition walls in place, by leaving cabling in floor voids, and by failure to remove a small number of bolts. Engage solicitors on the break notice 12 months before exercise. ## Dilapidations — the planning estimate On lease end, the landlord will serve a Schedule of Dilapidations claiming the cost of returning the premises to the standard required by the lease. For a high-end Cat A fit-out, plan for £35-£75 per square foot. The eventual settlement is typically negotiated below the schedule total — but provision the high end as a planning estimate. A Schedule of Condition on lease commencement is the single best dilapidations defense. So is a strip-out and reinstatement budget set aside from year one. ## Rent reviews and business rates Office leases typically include a five-yearly upward-only open-market rent review. Negotiate **collared and capped** reviews where possible — fixing a minimum and maximum movement. Business rates are a separate statutory tax — not the same as service charge. Rates are payable directly by the tenant to the local authority, calculated as approximately 50% of the rateable value annually. Provision for them as a known cost; budget for the rates revaluation cycle (currently every three years). ## Editorial provenance Reviewed by [**Class A Atlas Editorial Desk**](/about/authors/class-a-atlas-editorial-desk) — House byline · global editorial team. Last updated 2026-04-01. See our [methodology](/about/methodology) and [editorial standards](/about/editorial-standards). ### Primary sources for this page - [CBRE Marketview reports](https://www.cbre.com/insights) — CBRE - [JLL Office Insight](https://www.jll.com/en/trends-and-insights) — JLL - [Cushman & Wakefield Marketbeat](https://www.cushmanwakefield.com/en/insights) — Cushman & Wakefield - [Savills World Research](https://www.savills.com/research_articles/) — Savills - [Colliers Global Office Outlook](https://www.colliers.com/en/research) — Colliers [Full sources index](/about/sources) · [Submit a correction](/about/corrections) --- Citation: Source: Class A Atlas (https://classa.info/guides/uk-lease-glossary-fri-explained), updated 2026-04-01T00:00:00.000Z.