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As a commercial landlord, you will have responsibilities within the lease towards your tenant, which may be both general duties as well as other obligations outlined in your lease agreement. It is imperative that you adhere to these responsibilities, as a failure to do so could constitute a breach of the commercial lease. In the case a breach occurs, this could affect the length of time your tenant leases the property and, in the worst-case scenario, lead to future legal disputes. This article will set out the key commercial landlord obligations you should know about.
What is a Commercial Lease?
A commercial lease is where you, as a landlord, allow a business owner to have sole occupation of your property or part of it. Importantly, the premises will be used as their business premises. You allow them to use the premises for a specific business purpose and specified period. In return, your commercial tenant will pay you an agreed rent.
Your tenant will have key responsibilities in the lease and rights. As the landlord, you will also have key obligations and rights in the lease. A landlord’s obligations will primarily depend on what the lease agreement describes. However, some obligations are common to most commercial leases in the UK. We explore these below.
Health and Safety
As a commercial landlord, you will generally need to ensure that the property and overall building are safe for your commercial tenant’s occupation and others who may use the building before you lease it. Your obligations will heavily depend on the type of property you own.
Typical duties relating to health and safety involve matters such as:
- installation and maintenance of any fixtures and fittings you own;
- maintenance of the property’s electrical system; and
- compliance with gas safety responsibilities (failing to do so could result in a fine or imprisonment).
Your lease may also detail that the health and safety of the building’s communal areas are your responsibility. You may also be responsible for undertaking an asbestos assessment, creating a management plan, and providing fire safety equipment. Often, your business tenants will then take over these management responsibilities, which the lease may refer to specifically or generally.
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Repairs and Maintenance
Your lease agreement will also list your responsibilities concerning repairs and maintenance. These obligations will vary between each lease. However, you will typically be responsible for structural repairs, including:
- the foundations;
- flooring;
- the roof; and
- exterior walls.
Building Insurance
Arranging building insurance is normally your responsibility as the commercial landlord. You will initially pay for this but may pass it on to your tenant as insurance rent. Having building insurance is essential as it provides financial security to you should your property be damaged.
Although insurance does not have to strictly be your responsibility to arrange and pay, you may find it beneficial to make it yours. This is because you can:
- choose the level of cover you require;
- be the person to deal with any claims; and
- ensure that insurance is maintained for the property.
Key Takeaways
In carrying out your role as a commercial landlord, you must ensure you fulfil all of your relevant obligations and responsibilities to avoid legal action or tenant disputes. Whilst these duties can vary between individual leases, there are some typical responsibilities to note. These include:
- ensuring health and safety;
- tracking repair and maintenance issues, especially for structural repairs; and
- arranging building insurance.
If you need help understanding responsibilities in a commercial lease in the UK, our experienced leasing lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
A commercial lease is where a business owner has the sole occupation of a property or part of it for the use as their business premises and in return, pay the landlord rent.
As a commercial landlord, you will have various responsibilities within a commercial lease. The specific obligations you have ultimately depend on the type of lease and terms of the lease agreement. However, some standard responsibilities you may encounter are those related to health and safety, structural repairs and building insurance.
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