Getting to grips with your responsibilities
If you own a commercial property for rent, you’ll know it comes with certain responsibilities to your tenants and the wider public. But there is often a great deal of confusion about who is responsible for what, especially when it comes to legal health and safety requirements and insurance: landlord or tenant? And it’s no wonder, because as well as what’s written in the lease, there are legal responsibilities on both sides that can sometimes overlap.
We look at each area of commercial property landlord responsibilities and clear up any misconceptions.
Maintenance and repairs
Most commercial properties are let on a Fully Repairing and Insuring (FRI) Lease, which places the onus on the tenant for any repairs, as well as any costs to return the building to its original state at the end of the tenancy. However, don’t assume that all maintenance and repairs are the responsibility of the tenant.
If the building is let to multiple tenants, the landlord will usually retain responsibility for maintaining and cleaning communal areas and the structural integrity of the main building.
Commercial property insurance
Most commercial leases will seek to transfer the cost of insurance on to the tenants. But that doesn’t mean landlords can wash their hands of their responsibility for insurance – indeed, it’s in the landlord’s interest to arrange the insurance themselves for a variety of reasons. As well as being able to choose their own insurance broker or insurer, they can retain control over the whole process in the event of a claim, as well as specifying the level of cover, which can vary between insurers. There’s no such thing as a standard commercial property insurance policy, with some policies automatically including things like loss of rent or contents cover.
It’s important to make sure you have to right cover so, if you’re unsure how to insure a commercial property, get in touch with one of our experts.
The person with control over the premises will have responsibility for fire safety, including evacuation procedures, which will usually be the tenant if the premises are rented as a workplace. However, the landlord should always include fire safety in any risk assessment undertaken, and may be responsible for providing equipment, like fire extinguishers.
The terms of the lease should clearly set out who is responsible for the safety of any gas installations in the building. It will often specify that the tenant is responsible for ensuring the safety of any gas appliance, installation pipework or flue installed in their workplace, while landlords should look after the safety of installations in any communal areas.
There is a legal responsibility on the landlord to ensure that electrical safety standards are maintained. This includes a duty of care to ensure all reasonable steps and precautions are taken to prevent personal injury to tenants, or damage to their property. Tenants are responsible for the safety of any electrical appliances they buy or install.
The ‘duty holder’ has a responsibility to manage asbestos under the Control of Asbestos Regulations 2012. Under an FRI lease this will usually be the tenant, but if the duties are not clearly defined in the lease it will be the person who has the most control over the building.
Fixtures and fittings
Fixtures and fittings belonging to the landlord need to be safe to use, correctly installed and maintained by them. Tenants are responsible for the safety of and maintaining any fixtures and fittings they install. This should be made clear in the lease.
Air conditioning, heating or refrigeration systems
Responsibility for air conditioning, heating or refrigeration systems rests with the party who has control over the technical functioning of the equipment, which will usually be the tenant. But, the landlord may retain responsibility for these if they retain some day-to-day responsibilities for running the site.
Minimum Energy Efficiency Standards (MEES)
New regulations came into force on April 1, 2018 which made it a legal requirement for eligible rented properties to have an Energy Performance Certificate (EPC) rating of no worse than E.
- From now, it’s unlawful to grant new leases on a commercial property which has an EPC rating worse than E
- From April 1, 2023 it will be unlawful to continue to let eligible commercial property which does not meet the minimum standards.
The Code for Leasing Business Premises
Drawn up in 2007, the Code for Leasing Business Premises is a voluntary best practice code created by a collaboration between commercial property professionals and industry bodies representing both landlords and tenants. Its intention is to promote fairness in commercial leases, and landlords are encouraged to adhere to 10 key points, which can be found here.