What are the Obligations of a Commercial Landlord in the UK?

There are many reasons why people decide to become commercial landlords in the UK. It might be that you have bought the property as an investment, perhaps you have acquired a commercial property to let out, or it might be that you have down-sized your own business and hope to rent out the rest of the property. Or it might be that you have a string of commercial properties to rent. Whatever the reason for it, it is important that commercial landlords and landladies understand what the obligations of a commercial landlord in the UK are.

Being a commercial landlord can be very rewarding, but it is essential that they understand the responsibilities that come with the job. Landlords that do not comply with their obligations can end up, at best, with a bad reputation and problems finding tenants in the future, and at worst, in trouble with the law and with financial problems.

Here at Boxpod, we know exactly what commercial landlords need to be doing to stay within the law and to build a good, trusting relationship with their commercial tenants. In this article, we will take you through the key elements that are required of landlords, along with some of the other information that they might find useful.

What are the Basic Commercial Landlord Obligations and What are they for?

When it comes to the obligations and responsibilities of a commercial property landlord, the regulations are based generally on ensuring that the building and tenants are safe and well when they are occupying it.

Some of these regulations are stipulated in the Landlord and Tenant Act 1954, but the others can be defined through insurance regulations and health and safety regulations. The lease that the landlord agrees with their tenants when they are renting out a commercial property is the third part, which outlines the landlord’s responsibilities as well as the tenant’s.

The commercial property landlord’s obligations are based around:

• Ensuring that the basic utilities such as water, gas, and electricity are present, safe, and compliant with regulations
• Ensuring that the structure and outside of the property are well-maintained (unless otherwise agreed in the lease)
• Ensuring that access can be given for repairs, inspections, and maintenance work that is to be done on the building, having consulted with tenants – and given them the required amount of notice.
• Ensuring that the commercial property is free from health hazards such as asbestos and implementing fire safety measures
• Ensuring that the property is adequately insured
• Ensuring that anti-discrimination laws are complied with

What are the Maintenance Responsibilities of a Commercial Landlord?

In the UK, a commercial landlord is responsible for the structure and maintenance of the property. However, this can be amended to an extent through the commercial lease agreement that the landlord has with their tenant.

Generally speaking, however, the landlord must ensure that the building follows health and safety guidelines, such as for asbestos and subsidence, and complies with fire regulations on a broad scale. Large maintenance problems such as plumbing issues could also be the responsibility of the landlord, although this will normally depend on the size and type of issue it is.

The landlord would also normally be responsible for the maintenance and upkeep of communal and outside areas, as well as structural elements – exterior walls, inside and outside doors, roof and gutter, windows, and gardens, for example.

For properties with communal areas, the landlord is also normally responsible for fixtures and fittings, and the cleaning and maintenance of these spaces.

Who Looks After the Commercial Property Insurance?

It is essential that commercial properties are fully covered by insurance, but it can often be unclear about who is responsible for organising and paying for it.

The answer is that normally the landlord has the legal responsibility for getting the insurance on the property that covers the ‘bricks and mortar’. This would cover issues such as its physical structure, flooding and fire. It is not unheard of, however, for commercial leases to stipulate that tenants should pay this either entirely or as a contribution towards the premiums of the insurance (usually added into the service charge). Alternatively, some commercial leases would mandate that the tenants get and pay for the insurance – whilst noting the landlord’s interest.

The landlord must also ensure that the tenants are aware of the boundaries set in place to validate or invalidate the insurance – what they are and are not able to do. The landlord and tenant should stay in continuous contact regarding any issues or claims that are being made relating to the property’s insurance.

For tenants looking to rent a commercial property, it is important that they organise their own contents insurance for any of the business-related equipment, fixtures, and fittings within the commercial property. If tenants are having visitors or customers on the property, they must also ensure that they have their own Public Liability Insurance (PLI).

What Details Cannot be Changed in the Commercial Lease?

Although there are many elements in a commercial lease agreement between a landlord and tenant that can be changed, there are also certain elements that cannot. These are the differences between a landlord’s statutory duties and the lease terms. The statutory duties cannot be anyone else’s responsibility except for the landlord, whereas the lease terms can be negotiated.

A commercial landlord’s statutory duties include:

• Maintaining the structural integrity of the property, including roofs, exterior walls, and the property’s foundations
• Maintenance of common areas and shared facilities – shared toilets and kitchens, stairwells, entrance halls
• Compliance with health and safety regulations – managing, completing, and reviewing fire risk assessments, maintenance of alarms and detectors
• Signage and lighting of emergency exits, as well as ensuring that fire exit routes are clear and free of obstacles
• Electric and gas safety – annual gas checks carried out and recorded (if applicable), and electrical safety inspections carried out when necessary.
• Managing hazardous materials – hazardous materials such as asbestos must be monitored, managed, and repaired or dealt with if required.
• Insurance – the legal obligation is on the landlord that there is insurance for the commercial property; however, it is not necessarily their responsibility to get it if they have this previously arranged with the tenants.
• Service charges and financial transparency – if a landlord is taking money for service charges, they need to show transparency relating to the finances – providing invoices if requested and accounting for spending
• Planning and building control – the landlord must ensure that the commercial unit complies with planning and building controls, including ensuring that it (and its tenants) comply with the correct Use Case category
• Energy Performance Certificate (EPC) – there must be a valid EPC for the commercial property, and this includes ensuring that any work that is required to be done is carried out.

For a commercial landlord, here at Boxpod, we recommend that all the documentation, certificates, invoices, and other details are kept to show complete transparency.

It is also important for commercial landlords to be aware that they are obliged to allow their tenants a ‘duty of quiet enjoyment and non-interference’, meaning that tenants can use the property with minimal interference from the landlord, and will be given reasonable notice of visits, inspections, or works to be carried out on the property.

What Documents Does a Landlord Need When Renting Out a Commercial Property?

For landlords who are looking to rent out their commercial property, there are several documents that will be needed at the time of leasing it. Some of these are a legal requirement, and others are useful for tenants to have. We recommend that they have these documents on hand from when they start looking for tenants to rent the commercial property.

These documents include:

• Building safety and compliance records – including up-to-date EPC, fire risk assessments, electricity and gas safety certificates, asbestos plan of management.
• Any agreements between the landlord and suppliers, service and maintenance, for example, energy suppliers, cleaning contractors, gardeners, or security alarm companies.
• The insurance policy (according to the lease agreement that has been made) and any supporting documents.
• The lease agreement with details described concerning issues such as the rental amount, insurance arrangements, access, break clauses, and repairs responsibilities.

Final Thoughts

For any landlord that is looking to rent out a commercial property, it is essential that they know what their obligations and responsibilities are. These mainly revolve around ensuring that the tenants are kept safe and treated fairly.

Are you a landlord looking to rent out your commercial unit for as little as £12/month and with no agent’s fees? Then get in touch with us today!

Are you a business looking for a commercial property to rent? Take a look at the range of properties that we have listed here at Boxpod!