FRI Lease Solicitors for Commercial Property

When entering into a commercial property rental arrangement, one of the most common arrangements you’ll come across is the FRI lease. The term refers to Full Repairing and Insuring Lease and clarifies where the liability for repair, maintenance, and insurance costs lies: with the tenant. At Jamieson Law, we bring specialist expertise in commercial property law and a practical understanding of how FRI leases impact both tenants and landlords.

Lynne Riddell, our commercial property specialist, brings over 15 years of experience working as an FRI lease solicitor, successfully guiding many clients through FRI’s complexities.

Why does this matter? If FRI lease agreements are poorly understood and implemented, they can create significant financial risk. At Jamieson Law, we can steer both tenants and landlords through the details, helping avoid unexpected costs and mitigating the risk of disputes while protecting your commercial interests.

What is an FRI Lease?

An FRI lease, or Full Repairing and Insuring Lease, is a type of commercial lease in which the tenant assumes responsibility not only for rent but also for maintaining the property and contributing to insurance costs. In plain English, this means the tenant is responsible for keeping the property in good condition, regardless of whether issues are due to wear and tear, age, or pre-existing issues. The advantage to the landlord is that they retain ownership of a key asset but transfer much of the upkeep burden to the tenant.

FRI leases are relatively common in retail premises, high-street shops, office buildings, workshops, industrial facilities, and warehousing. For many businesses, FRI arrangements can be perfectly workable. If rents are deemed fair, excluding upkeep costs, both parties can consider FRI leasing a good deal. However, this is only the case if the responsibilities included in the details of any agreement are clearly understood, negotiated in good faith, and feature in the lease drafting process from the outset.

Typical Responsibilities Under an FRI Lease

The primary feature of an FRI lease is the tenant’s repair obligations. These can be extensive and may include:

Internal and external repairs, from fixing leaky roofs to repainting walls.

Maintenance of fixtures, fittings, and services, including plumbing and electrics.

Contribution to building insurance premiums arranged by the landlord.

Maintaining the property's compliance with health and safety, as well as environmental regulations.

‘Making good’ any damage or wear and tear.

For tenants, the key risk is that these obligations go beyond expected day-to-day upkeep. The fact that a defect existed before the lease began does not guarantee that it won’t be included in your FRI lease responsibilities. You may still be liable for repairs unless the lease expressly excludes known issues. That’s why, alongside legal advice, a professional property survey is a vital part of entering FRI negotiations.

Within an FRI framework, landlords usually seek to minimise their own responsibilities. Minimising costs equals a greater profit from rental income. Without careful lease negotiation, tenants can find themselves liable for repair costs that exceed what is generally considered typical.

Risks and Common FRI Disputes

Because of the imbalance of obligations, poorly understood or managed FRI leases are often the source of legal disputes. Some of the most common risks include:

Hidden repair costs

Without proper care, tenants can be surprised by significant repair and maintenance issues associated with their premises. They are not protected if problems such as subsidence or roof leaks come to light after they have signed their lease. This risk can be mitigated by thoroughly surveying a property before signing any paperwork.

Repair vs. Improvement

The key to the spirit of an FRI lease is a tenant’s liability for the upkeep of a property and recompense for wear and tear, often referred to as dilapidations. Works that arguably enhance the property rather than simply maintain it or return it to its original state when the tenant took occupancy are frequently the cause of dispute.

Insurance disputes

Should damage happen, complicated questions can arise about whether costs should be covered by the landlord’s insurance or be treated as the tenant’s repair obligation.

For example, imagine, as a tenant, your building survey reveals a significant underlying damp issue before a lease is signed. Without legal protection, you could find yourself liable for extensive repairs. Careful negotiation around a specific damp clause, limiting the tenant’s obligations to reasonable non-structural repairs, for example, and excluding pre-existing dampness issues, will save you from potentially excessive costs.

How to Negotiate an FRI Lease Fairly

Despite the impression that FRI leases favour landlords, this doesn’t mean tenants have no power to negotiate. There’s nothing inherently one-sided about shifting liabilities and repair obligations in a commercial lease. They just need to be handled openly, frankly and with precision. As a tenant, you can achieve terms that reflect your business’s needs while protecting against disproportionate liability. As a landlord, you can derive a fair and reasonable rent income.

Repair Clauses

It’s essential to establish clear expectations regarding repair expectations in any FRI lease. What does returning the property to the same condition it had at the start of a lease period mean? A detailed ‘schedule of condition’ from a suitably qualified property surveyor is an important tool here. Clauses need to cover actual details of the property rather than generic language.

Exclusions

A fair FRI should exclude inherent building defects, known structural issues, and faults beyond a tenant’s control from tenant obligations. It can be in a landlord’s interests to minimise exclusions, whereas tenants ought to maximise them. It’s here that expert legal advice can significantly help any negotiation.

Shared Service Charges

It is likely that a commercial building will incur a range of ongoing service charges and maintenance costs. It is essential that an FRI lease clearly outlines the liabilities for these costs, especially if a landlord has multiple tenants. Again, a property specialist can advise on what is reasonable for a particular building type based on condition and location.

Insurance Terms

The landlord will likely have a building’s insurance policy, but it is in their interests to minimise costs associated with it and, if possible, avoid making claims against it. They may, as part of an FRI lease, encourage tenants to assume a greater share of insurance costs or, if required, make a claim on their own insurance for insurable incidents, whatever the cause. Again, the risk of excessive insurance costs, on either side, can be mitigated by careful and detailed negotiations.

Why Choose Jamieson Law for FRI Legal Advice

If you’re facing the prospect of a new FRI lease, why work with experienced commercial property solicitors helping clients in Scotland, Ireland, and across the UK? We can help review liabilities to protect your bank balance.

Jamieson Law provides legal support across the retail, office, and industrial property sectors. Our clients trust us to protect them from hidden risks, negotiate terms that reflect their commercial priorities, and support them throughout lease management lifecycles, from initial drafting to renewals and disputes.

Frequently Asked Questions

What is an FRI lease in the UK?

FRI stands for a Full Repairing & Insuring lease. This describes an agreement where the tenant is responsible for maintaining the property and paying a portion of the insurance costs.

Who pays for repairs under an FRI lease?

Usually, the tenant, unless the FRI lease explicitly excludes certain repairs (such as pre-existing structural defects). This is why tenants need to be careful with what they sign.

Is an FRI lease fair for tenants?

Yes. An FRI lease can be fair if obligations are clearly defined and negotiated. Without care, tenants may face disproportionate costs, but with a well-drafted, strongly negotiated lease, both parties can be happy.

Should tenants negotiate the terms of an FRI lease?

Yes. In fact, it’s important that tenants get legal advice and negotiate strongly to avoid excessive costs and reduce the likelihood of disputes.

What’s the difference between an FRI lease and other types of commercial leases?

In an FRI lease, the tenant assumes both repair and insurance costs. Repair obligations are more likely to remain fully or partly with the landlord in other forms of leasing.

How long does an FRI lease usually last?

FRI leases can have terms of any length, but are typically between 5 and 25 years, depending on the property type and the parties’ needs. Many include break clauses or renewal options, which can be negotiated to provide flexibility for tenants.