What are the responsibilities of a commercial landlord?
If you own a commercial property for rent, you’ll know it comes with certain responsibilities to your tenants and the wider public. But it can be confusing to know who is responsible for what, especially when it comes to legal health and safety requirements and insurance. Does it sit with the landlord or the tenant? It’s no wonder, because as well as what’s written in the lease, there are legal responsibilities 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. This means the tenant is responsible for repairs during the tenancy, as well as any costs to return the building to its original state when the tenancy ends. 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. Similarly, they are also in charge of the structural integrity of the main building. A landlord will often levy a service charge for maintaining these areas.
Commercial property insurance
Most commercial leases will look to transfer the cost of insurance on to the tenants. However, that doesn’t mean landlords can wash their hands of their responsibility for insurance. In fact, it’s in their interest to arrange insurance themselves for a variety of reasons, such as unoccupied commercial property insurance if there are no tenants within the building. Alongside being able to choose their own insurer, they can be involved in the whole process if there is a claim. They can also specify the level of cover, which can vary between insurers.
There’s no such thing as a standard commercial property insurance policy, but it’s important to make sure you have the right cover. Some policies include things like loss of rent or contents cover, while these will be add-ons to other policies. If you’re unsure how to how to insure your 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. If the premises are rented as a workplace, this is usually the tenant. However, the landlord should always include fire safety in any risk assessment undertaken, and may be responsible for providing safety 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. Usually, the tenant is responsible for the safety of any gas appliance, installation pipework or flue installed in their workplace. Meanwhile, landlords should look after the safety of installations in any communal areas and need to provide safety certificates. The Gas Safety (Installation and Use) Regulations 1998 specifies that installations and appliances should be inspected annually by a Gas Safe engineer, with records kept for a minimum of two years.
The landlord has a legal responsibility 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. The Electrical Safety Council recommends that full testing is carried out every five years or when the tenancy changes. On the other hand, 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. Buildings constructed after 2000 should not contain asbestos, but anything constructed before that must include asbestos in any risk assessments before building work is carried out.
Fixtures and fittings
Fixtures and fittings belonging to the landlord need to be safe to use, correctly installed and maintained by them. However, tenants are responsible for the safety of and maintaining any fixtures and fittings they install. This should be clear in the lease.
Air conditioning, heating or refrigeration systems
Responsibility for air conditioning, heating or refrigeration systems rests with whoever has control over the technical functioning of the equipment. This is usually the tenant. However, 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.
Some properties, such as listed buildings and temporary structures may be exempt.
Read our guide: EPCs and energy rules for landlords
The Code for Leasing Business Premises
Drawn up in 2007, the Code for Leasing Business Premises is a voluntary best practice code. It was 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.
Private landlord responsibilities
If you are a landlord renting one or more residential properties, read our guide to private landlord responsibilities which takes a comprehensive look at all the rules and legislation that govern the agreement between landlord and tenant.
If you’d like more info on landlord requirements, read our full guide to landlord certificate requirements.