A Guide To Your Rights And Responsibilities As A Commercial Landlord
If you are the landlord of a commercial property, it is crucial that you understand the responsibilities that you have to your tenants. Under the law and under the terms of the lease, you will have many duties to fulfil in terms of health and safety requirements and with regard to the upkeep of the building. Whilst many of these responsibilities will be shared between you and your tenant(s), our guide outlines some of the most important things you should be aware of as a commercial landlord.
You will typically share responsibilities for health and safety compliance with your tenants. Whilst they may be required to look after the space they rent, the landlord is likely to have to look after compliance in communal areas. For example, if your tenants pay a service charge for a lift to be cleaned and maintained, you will have to ensure that health and safety regulations are complied with in this area.
Commercial leases differ from residential leases. Under a residential tenancy the onus is often very much on the landlord to comply with any regulations, whereas under a commercial lease the tenant is generally responsible for much of the health and safety compliance, even if you hold the commercial mortgage.
In terms of gas safety, the onus for health and safety compliance is firmly on your tenants. Under the Gas Safety (Installation and Use) Regulations 1998 it is your tenants that have legal responsibility to ensure that appliances are checked for gas safety. They must also ensure that an annual gas safety check is carried out. Equipment must be serviced regularly by a qualified GasSafe engineer and maintained in accordance with the manufacturer's instructions.
Fire safety is another important issue and, again, the responsibility for this is shared between you and your tenant(s). Whilst your tenants may have responsibility for ensuring that fire safety regulations are adhered to in the premises they rent, you will typically have overall responsibility for the building. So, you are likely to have ultimate responsibility for building systems such as a fire alarm.
Electrical safety is another important concern. The duty of care with regard to electrical safety varies from commercial property to commercial property and will typically be set out in the lease. Tenants will generally be required to assess and manage the electrical risks in their premises whilst the landlord may have ultimate responsibility for the building's wiring system. Either way, making sure that you regularly undertake electrical safety checks is advised.
When using a commercial mortgage to buy a property, you are obliged to provide your tenants with an Energy Performance Certificate (EPC). EPCs provide information on the energy efficiency of a building as well as suggestions on how carbon emissions can be reduced and energy usage minimised.
Do not forget also that you need to ensure that your business loan and commercial mortgage is paid regularly and in a timely fashion. Manage your income from rent and your cash flow carefully to ensure that you do not end up in commercial mortgage arrears.
The division of responsibility for the upkeep of the commercial property itself is likely to be your final concern. Again, the duties are generally shared between landlord and tenant, with the tenant usually responsible for internal repairs and maintenance. The landlord will generally be responsible for external repairs or maintenance to communal areas or areas for which a service charge is payable (upkeep or a car park or grounds, for example).
Unlike residential tenancy agreements, the duty of care under a commercial lease is often on the tenant, not the landlord. Even if this is the case, it is recommended that you set out both your and your tenants responsibilities in a lease or other contractual agreement before the tenancy begins.
About the Author:
Howard writes for Just Commercial Mortgages.com the UK's No.1 site for the latest commercial mortgage rates and commercial property finance news.
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