Industrial Leases Explained: The Ins and Outs of a Full Repairing and Insuring (FRI) Lease

An industrial lease gives a tenant the right to occupy and use a property exclusively for a specified period. These leases are typically used for industrial purposes such as manufacturing, storage or distribution.

At Acumen Law, our commercial property solicitors in Brighton & Hove regularly advise both landlords and tenants on negotiating, drafting and reviewing industrial leases, ensuring terms are clear, fair and protect out clients’ commercial interests.

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What is an industrial lease?

An industrial lease is a legally binding agreement between a landlord and a tenant for premises used for industrial purposes. The term usually ranges from 3 to 25 years, depending on the business’s needs.

The lease sets out the parties’ obligations, including maintenance and repair, insurance, permitted use, alterations and whether the tenant can assign or sublet the premises.

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Key Clauses in an Industrial Lease

Maintenance & Insurance Obligations

Most industrial leases are full repairing and insuring (FRI). This means the tenant takes on responsibility for repairing and maintaining the entire property and reimbursing the landlord for insurance premiums via an insurance rent.

The landlord arranges the insurance policy, while the tenant pays the cost, ensuring the property remains adequately insured throughout the lease term.

Service Charges

In multi-let industrial estates, landlords typically maintain common areas such as access roads or shared facilities. These costs are recovered from tenants via a service charge, apportioned according to the lease terms.

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Use of Premises

The lease will specify the permitted use of the premises, usually limited to industrial or light industrial purposes. This prevents misuse of the property and helps landlords maintain control over the site’s operations.

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Alterations

Tenants generally need the landlord’s consent to make alterations to the premises. Depending on the lease wording, the landlord may only refuse consent if it is reasonable to do so.

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Assignment and Subletting

Similarly, a tenant’s ability to assign the lease or sublet part or all of the premises will depend on the landlord’s consent. Under the Landlord and Tenant Act 1988, such consent cannot be unreasonably withheld, though the lease wording will determine the process.

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Granting an Industrial Lease

Negotiation

Before granting a lease, both parties negotiate key commercial terms, including the rent, lease term, rent review provisions and repairing obligations. A well-drafted lease reflects these terms clearly to avoid future disputes.

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Due Diligence

The landlord will assess the tenant’s financial position and suitability for the premises. Meanwhile, the tenant should inspect the property and investigate whether it meets their business needs, particularly in relation to repair obligations under an FRI lease

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Drafting and Execution

Once terms are agree, the parties’ solicitors prepare the draft lease and arrange for it to be executed. Most leases are executed as a deed to ensure legal validity.

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A lease is usually signed in counterparts, meaning the landlord and tenant each sign an identical copy.

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Advantages of an Industrial Lease

For Landlords

• Regular rental income and potential rent reviews to reflect market value.
• Control over the property through consent provisions for alterations or subletting.
• Reduced maintenance burden under an FRI structure.

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For Tenants

• Flexibility to occupy industrial premises without the up front cost of purchase.
• Ability to negotiate break clauses and adapt terms to business needs.
• Option to relocate or expand at the end of term.

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Disadvantages of an Industrial Lease

For Landlords

• Tenants may gain security of tenure under the Landlord and Tenant Act 1954, allowing them to remain in occupation after the lease term unless “contracted out”.
• Risk of tenants defaulting on rent or neglecting repair obligations.

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For Tenants

• Limit control over the property, as a landlord consent is often required for alterations or subletting.
• FRI obligations can be onerous, with tenants responsible for all repair and insurance costs.

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Why Legal Advice Matters

An FRI lease offers benefits but also carries significant responsibilities. Clear, well-negotiated terms and professional drafting are essential to avoid disputes later.

Acumen Law, our commercial property experts in Brighton & Hove help landlords and tenants across Sussex to understand their obligations, negotiate fair terms and protect their commercial interests throughout the leasing process.

If you’re considering granting or taking an industrial lease, contact us today for specialist legal advice tailored to your business.

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