Answers · Agreement for lease (AFL)
What is an agreement for lease?
Direct answer
An agreement for lease (AFL) is a binding contract in which a tenant and landlord commit to enter a lease once specified conditions are satisfied — typically practical completion of a building. It bridges the gap between agreeing terms and a facility existing, which is why it underpins most pre-commitment and build-to-suit deals.
A lease needs premises to attach to, but a purpose-built facility can take months to design and construct. The AFL solves that timing problem: it locks in the commercial terms — rent, term, reviews, permitted use — up front, with the lease itself commencing once the building reaches an agreed milestone, usually practical completion or issue of a certificate of occupancy.
For the tenant, an AFL is a genuine commitment, not a soft option — walking away later typically has consequences, because the landlord relies on it to fund and build. For the landlord or developer, it's the certainty that makes financing and construction possible in the first place. Conditions commonly cover design sign-off, delivery timeframes, and what happens if completion is delayed.
Because the AFL is where the real negotiation happens — the lease that follows is largely administrative — it deserves the same scrutiny as a finished lease. Getting the permitted use, review mechanism and make-good obligations right in the AFL avoids disputes once the building is standing and the lease takes effect.
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