What is an FRI Lease and do I need one?

Hannah Swinton, provides a quick guide to Full Repairing and Insuring leases for both landlords and tenants.

4 September 2023

What does FRI mean?

FRI stands for a “full repairing and insuring” lease: one that shifts all obligations of repair and maintenance of the premises onto the tenant.

I’m a landlord - do I have repairing obligations?

Under common law, at the start of the lease, a landlord is obliged to hand over premises to the tenant that are reasonably fit for the purposes let.

Landlords must also carry out “extraordinary” repairs to the premises during the currency of the lease at common law.

What are “extraordinary repairs”?

We’re often asked to define what an extraordinary repair is - the answer is not clear cut…

As the expression suggests, such repairs are not everyday repairs that arise through fair wear and tear.

To decide whether a repair is “extraordinary” or “ordinary” you need to look at the origin, the extent, and the nature of the damage.

The more unusual the cause, the more extensive the damage and the more devastating the effect, the more likely it is that it will be deemed an extraordinary repair.

I’m a landlord - how do I contract out of liability?

To avoid any suggestion that a landlord is liable for any repairs, a well-drafted FRI lease should make it clear that responsibility for all repairs falls on the tenant, irrespective of the extent, nature or origin of the damage.

The new set of leases produced by the Property Standardisation Group (based on the English MCL equivalents) goes one stage further and specifically states that “all common law obligations of the Landlord for ordinary and/or extraordinary repair, replacement, renewal or reinstatement of the Premises are excluded,” putting the question of liability for repairs beyond any doubt.

Other clauses within a lease (such as the obligation to comply with statute and the requirements of the landlord’s insurers) should also be carefully considered to ensure that there is a genuine shifting of all repair obligations from landlord to tenant.

I’m a tenant - do I need to take an FRI Lease?

Whether or not a genuine FRI lease is appropriate in the circumstances depends on many things such as the nature and condition of the subjects let, the parties’ respective bargaining positions and the length of the proposed lease.

If circumstances dictate that an FRI lease is inappropriate, there are various ways to temper a tenant’s repairing obligation to ensure an equitable spread of obligations between the parties.

An FRI Lease continues to be the norm for the majority of leasehold transactions in Scotland. However, it’s important to understand the implications of this and the alternatives available.

If you need legal support in connection with a lease, or with any other real estate contract, please do not hesitate to contact Shepherd and Wedderburn's top-ranked real estate team.