Guide to agreements for lease with development obligations

A ‘pre-let’ is an agreement for lease with major developer’s works. It is used in situations where: (i) the property which is to be demised to the tenant has not yet been constructed or is to undergo substantial refurbishment before it is fit to be occupied, (ii) the developer contracts to procure completion of the required works by a projected target date, and (iii) the tenant contracts to take a lease of the property if those works are completed before that date.

This type of agreement is also sometimes referred to as a ‘pre-letting agreement’ or a ‘development agreement’, but the latter term in particular has the potential to cause confusion because it is also used to describe either:

1. • a ‘stand alone’ development agreement, where a landowner contracts with a developer to carry out a development project, either at the expense of the developer or at the expense of the landowner (see Precedent: Property development agreement) and/or
2. • a forward sale/purchase