What Repair Obligations Might Commercial Tenants Have in UK Leases?

When you lease a commercial property, you will have particular obligations that you must carry out, or you could be in breach of the lease. One of your obligations in a commercial lease is your repair obligations. A violation of a commercial lease risks the loss of your commercial space and could involve going to court. This article will explain what repair obligations a commercial tenant like you may have in a commercial lease.

Commercial Lease Agreement  

When you enter a commercial lease, you sign a lease agreement with your landlord. This is a legally binding written contract containing details about your commercial lease. The details include your landlord’s rights and obligations in the commercial lease. For example:

• the amount and frequency of rent payments;
• the lease term, which is how long you can occupy the business premises for; and
• any break clause to allow a party to terminate the lease earlier than the lease term.

Your commercial lease will also contain your repair obligations in the commercial lease. Below, we detail what else might be included.

Full Repairing and Insuring Lease

Although a tenant’s repair obligations in a commercial lease vary, many landlords will opt for a full repairing and insuring commercial lease. This is because it protects their interest in their property at little cost.

A full repairing and inspiring lease means that you, as the commercial tenant, are liable for:

• ensuring repairs and maintenance take place for your commercial premises in the areas the lease covers, which can include the structure and roof;
• the cost of repairs for these; and
• the cost of insurance for these.

However, your landlord will generally arrange the insurance while you pay a ‘rent’ that reflects the premiums. The landlord is also commonly responsible for repairs you are not obligated to carry out. Although, this is an area that can quickly become complicated through poor lease drafting and insurance provisions. A lawyer can help you review these terms. 

If you rent out a part of a commercial building for your premises and other business owners rent out different parts, you will be responsible for maintaining and repairing the parts your lease covers. Usually, this includes internal parts only, so you have partial repair responsibility. In this case, your landlord will usually be responsible for repairs and maintenance of common parts and for the structure and exterior of the building. However, you will likely end up paying part of the costs of your landlord’s responsibilities through a service charge. Therefore, you must check your lease details as sometimes parts you consider are structural are your responsibility. This includes windows and shopfronts.

Standard of Repairs

The standard of repairs will usually be to ensure the premises are ‘in good and substantial repair and condition’. What this means varies between properties as you must consider the property’s:

• nature,
• location, and
• age.

Unfortunately, where a property is old or already in disrepair, you may be liable to ‘put’ the premises into repair to comply with your ongoing repair obligations. This effectively means improving the landlord’s property. Where this might be the case, it is advisable to:

• obtain a professional survey to assess the repair condition of the premises; and 
• negotiate to anchor or limit your repair requirements to a schedule of conditions so there is a documented baseline condition. 

It is also wise to have the landlord repair any damage or disrepair to the premises or to give you the incentive to do so before the lease commences or you start paying rent. 

Alternative Repairing Obligations

Although most commercial leases will be full repairing and insuring leases, this type of repair obligation may not be suited to your commercial lease. This may be the case if:

• you have a short lease term; or
• your commercial premises were in a poor state of repair when you take on the lease.

In these cases, you should draw up a schedule of conditions with your landlord and limit your repair obligations to that schedule. Normally, this will mean your repair clause will state that you must repair and maintain the premises in ‘no worse state of repair and condition as shown in the schedule of condition’. A schedule of conditions is often attached to the lease itself and can contain: 

• words; 
• photos; and 
• documented evidence.

Alternatively, some landlords will allow the repair obligation for their tenants to keep the commercial premises clean and tidy and only repair damage they are responsible for. This is a ‘broom-swept’ repair obligation. 

Key Takeaways

You must ensure you know your repair obligations in your commercial lease. Most commercial leases are fully repairing and insuring leases, which means you are reasonable for all repairs, including the cost and insurance. Repairs are often substantial repairs and can require you to bring the property to that standard at the outset of your lease. You can have a less onerous repair obligation for your lease, which is where the property is in poor condition when you take it, or perhaps because it is a short-term lease.

If you need help understanding a tenant’s repair obligations in a commercial lease in the UK, LegalVision’s 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. So call us today on 0808 196 8584 or visit our membership page.

Frequently Asked Questions