Commercial Landlord Guide!
Are you the landlord of commercial premises? If so, you have a number of responsibilities under the law and under the commercial tenancy agreement you have with your tenants. These responsibilities include health and safety requirements as well as more general duties about maintenance and the upkeep of the building. Many responsibilities are shared between you and your tenant, and our guide outlines some of the most important duties you have as a commercial landlord.
Responsibilities for compliance with health and safety regulations are often shared between you as the landlord and your tenant(s). For example, if your tenants pay a service charge for stairs to be cleaned and toilets to be kept in good order, it is likely to be you as the commercial landlord that has ultimate responsibility for ensuring that health and safety rules are complied with in these areas.
However, even if you hold the commercial mortgage and ownership of the premises, it is often the case that commercial leases put the onus for health and safety compliance on the tenant.
You may think that it is the responsibility of the commercial landlord to ensure that appliances are checked for gas safety and that an annual safety check is carried out. However, it is your tenants that have legal duties under the Gas Safety (Installation and Use) Regulations 1998. These regulations require tenants to ensure that any gas appliance or installation is maintained in a safe condition. The equipment must be maintained in accordance with the manufacturer’s instructions and be serviced on a regular basis by a qualified engineer.
In most commercial premises, responsibilities for safety are shared between you and the tenant. Fire safety is a good example. In an office block occupied by multiple tenants, the individual tenants have responsibility for the areas that house their employees. However, you (as the landlord) or the managing agent must ensure that fire regulations are complied with on common staircases. You are likely to also be responsible for ensuring that fire safety equipment, such as a fore alarm or sprinkler system, is regularly checked and in working order.
In terms of electrical safety, the responsibility in commercial premises is likely to be determined by the lease. Either the lease, or a separate agreement, should set out whether the landlord, managing agent or tenant takes on these responsibilities. This will typically include tenants assessing their electrical risks and ensuring that their equipment and systems are safe. However, you as the landlord may have ultimate responsibility for the wiring system and electrical equipment that covers the whole building. It is therefore wise to conduct electrical safety checks before you let your commercial property.
One responsibility that you do have as a commercial landlord is to provide prospective tenants with an Energy Performance Certificate (EPC). An EPC provides information on energy efficiency using an A-G rating system. It also recommends improvements to energy efficiency which can help you and your tenants reduce energy consumption and carbon emissions.
Of course, one of your other responsibilities as a landlord is to ensure that any commercial mortgage or business loan is paid on a timely basis. Whatever borrowing you have on the commercial property should be paid regularly and on time. Don’t get into commercial mortgage arrears.
Finally, as a commercial landlord you are likely to share responsibilities for the maintenance and upkeep of the property itself. Whilst tenants are typically responsible for internal repairs, you may well have a duty to look after external maintenance or repairs to communal areas. Again, the division of responsibility for maintenance is likely to be outlined in the lease.
So, while the lease (or a separate contractual agreement) is highly recommended in order to ensure that both you and your tenants understand their responsibilities, the ultimate legal responsibility will generally remain with the occupier of the workplace concerned. This is an important fact, as this only applies to commercial landlords, and not residential landlords.
March 17, 2011
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