New Launch - India Real Estate Report 2026.

When does Full Repairing and Insuring Lease apply in a property deal?

A Full Repairing and Insuring (FRI) Lease is a commercial lease structure where the tenant is responsible for all repair, maintenance, and insurance costs of the leased property throughout the lease term. This means the landlord receives a completely net rent with no deductions for property upkeep expenses. FRI leases are the most common structure in UK and Indian commercial real estate for offices, retail, and industrial properties.

When FRI Leases Are Typically Applied

FRI leases are most commonly used in:

  • Long-term commercial office leases – Typically 5 to 25 years with institutional landlords
  • Retail and high street properties – Where tenants carry out fit-outs and maintain their own premises
  • Industrial and warehouse facilities – Where tenants have specific operational requirements
  • Sale-and-leaseback transactions – Where the original owner sells and leases back, taking on full repairing obligations
  • Single-tenant net lease properties – Especially with creditworthy corporate occupiers

Tenant Responsibilities Under FRI Lease

  • Internal repairs – All internal maintenance including floors, walls, ceilings, and fixtures
  • External repairs – Roof, façade, drainage, and structural elements (in absolute FRI leases)
  • Building insurance – Tenant may be required to insure or reimburse landlord's insurance premium
  • Dilapidations – Restoring property to original condition at lease expiry
  • Service charge contributions – In multi-tenanted buildings, FRI obligations may be shared

Landlord Benefits and Tenant Risks

  • Landlords benefit from predictable net income without maintenance cost uncertainty
  • Tenants bear the full financial risk of unexpected repair and insurance costs
  • Dilapidations claims at lease end can be significant financial liabilities for tenants

FRI leases are the standard in commercial real estate for long-term institutional transactions because they provide landlords with clean, predictable returns. Tenants considering an FRI lease must conduct a thorough building survey before signing to understand the full extent of their repair obligations. Engaging a qualified chartered surveyor to assess the property's condition at lease commencement is strongly recommended.

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