A full repairing and insuring (FRI) lease is a commercial lease where the tenant takes responsibility for repairing the property and pays the cost of insuring it. It is the most common structure for industrial and many other commercial lettings in the UK.
What the tenant pays
- Rent
- Repairs and maintenance, often including the structure and roof for single-let buildings
- The insurance premium, usually arranged by the landlord and recharged
- Business rates and utilities
Multi-let buildings
Where several tenants share a building or estate, each tenant usually repairs its own unit and contributes to shared costs through a service charge. The lease is then often described as effectively FRI.
Dilapidations
At the end of the lease, the tenant must hand the property back in the condition the lease requires. If it does not, the landlord can claim the cost of the work, known as a dilapidations claim.
Why it matters to investors
FRI terms mean more of the rent reaches the owner as net income while the property is let. The risk shifts to periods when the property is empty, when the owner pays rates, insurance and repairs.
This guide is general information, not financial, tax or legal advice. If you are unsure whether an investment is right for you, speak to a regulated financial adviser.