What Repair Obligations Might Commercial Tenants Have in UK Leases?

In Short
Commercial leases in the UK usually place repair obligations on the tenant, often through a full repairing and insuring lease. This can require you to maintain, repair, and sometimes improve the premises, even if they were already in poor condition. Failing to meet these obligations can put you in breach of the lease.

Tips for Businesses
Before signing, review the repair clause carefully and check exactly which parts of the property you must maintain. Consider commissioning a building survey and negotiating a schedule of condition to limit your obligations. If the premises need work or the lease is short-term, explore alternative repair standards rather than accepting full repairing responsibility.

Summary
This guide explains repair obligations in UK commercial leases for business tenants and outlines the risks of non-compliance. It is prepared by LegalVision’s business lawyers, who specialise in advising clients on UK commercial leasing and tenant obligations.

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On this page

• Commercial Lease Agreement  
• Full Repairing and Insuring Lease
• Alternative Repairing Obligations
• Key Takeaways
• Frequently Asked Questions

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. Some of your obligations in a commercial lease will be your repair obligations. A breach of a commercial lease risks the landlord retaking control of your commercial space and could even involve going to court. This article will explain what repair obligations may be included in your commercial lease and the consequences of non-compliance with these.

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Commercial Lease Agreement  

When you enter a commercial lease, you sign a lease agreement with your landlord. This is a legally binding written contract, which contains the terms of your occupation of the property. The terms set out both your and your landlord’s rights and obligations under the commercial lease. Also, it will set out some practical elements of the transaction between the parties. 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 end of the lease term.

You will usually have negotiated some of these terms with the landlord. 

Some of the key obligations in your lease will include your repair obligations, which can impact your business both during and after the term. These are detailed below.

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 direct cost to them.

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.

Your landlord will usually hold the building insurance cover for the property, and will on-charge all or a proportion of that cover to you. For example, if you occupy one unit on an industrial estate but the Landlord’s policy is for the entire estate, you would pay a proportion that reflects the insurance of your unit. 

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 as structural may be 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 already in disrepair, you may be liable to ‘put’ the premises into repair to comply with your ongoing repair obligations. 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 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 took 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 condition 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 responsible 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 provides ongoing legal support for businesses through our fixed-fee legal membership. Our experienced leasing lawyers help businesses across industries manage contracts, employment law, disputes, intellectual property, and more, with unlimited access to specialist lawyers for a fixed monthly fee. To learn more about LegalVision’s legal membership, call 0808 196 8584 or visit our membership page.

Frequently Asked Questions