Office leases are full of jargon that quietly changes what you owe. Here is a plain-English glossary of the terms you will meet when renting office space - so nothing in the contract surprises you later.
The terms you need to know
Heads of terms — A non-binding summary of the main commercial points, agreed before lawyers draft the lease. Get your key asks in here.
Break clause — The right for tenant (or landlord) to end the lease early on a set date, usually with notice. Key flexibility for uncertain plans.
Rent-free period — Months at the start of the lease with no rent charged, used to offset your move or fit-out. Negotiable.
Service charge — Your share of the building’s running costs - cleaning, security, common utilities, maintenance - billed on top of rent.
Rent review — A scheduled adjustment of the rent during the term, often to an index (e.g. HICP). Check the mechanism and any cap.
Covenant (strength) — A measure of how financially reliable a tenant is. A strong covenant earns better terms.
Dilapidations — The cost of returning the space to its agreed condition at lease end. Can be a nasty surprise if ignored upfront.
CAT A / CAT B fit-out — CAT A is the landlord’s basic finish (floors, ceilings, services). CAT B is your bespoke fit-out - desks, meeting rooms, branding.
Add-on factor — The percentage added to usable area for a share of common parts. Typically 3-8% for offices; rents are often quoted on the resulting gross area.
Gross vs usable area — Usable (net) is the space you occupy; gross (lettable) adds a share of common areas. Rents are often quoted on gross.
Assignment / sublet — Passing your lease to another company (assignment) or renting part of your space out (sublet). Check whether the lease allows it.
For how gross and net office leases differ in what you actually pay, see office service charges and lease types.
