What Are The Responsibilities of a Commercial Landlord?
Investing is becoming more accessible than ever before, which has led to more and more people considering alternative paths to grow their money. Residential property has long been popular with investors, due to its accessibility and ease – after all, if you live in a home, you have a pretty good idea of what is required to maintain your asset.
Commercial property is growing in popularity too, as people are beginning to realise that it may not be as expensive as they initially thought. Due to the various sizes of these spaces, everything from small retail spaces to large office complexes, there is a wide range of opportunities.
So, if you’re looking into commercial opportunities, or are trying to better manage your current investments, you may be wondering what are the responsibilities of a commercial landlord. Not to worry, we’ve got you covered.
This article will explore what a landlord is responsible for in a commercial lease and cover everything from the maintenance of the property, to protecting yourself with the right insurance in case the worst happens.
1. General Upkeep
The responsibilities of tenant and landlord will vary and will be dictated by the terms of the lease that has been agreed upon by the respective parties. Structural repairs, such as flooring, roof and exterior walls, and other parts such as the foundation are normally taken care of by the landlord.
Otherwise, most other repairs and maintenance will be the responsibility of the tenant unless specifically stated otherwise within the lease. This includes everything from cleaning, to non-structural repairs, such as plumbing or air conditioning.
The tenant will have an obligation to maintain the standards of the property as best they can. In some cases, they may even need to leave the property in a better state than it was when they moved in. This expectation would be set out in what is known as a “Full Repairing and Insuring lease”.
In larger spaces with multiple tenants, the landlord will typically be responsible for communal areas. Often, they will charge a service fee for cleaning and maintaining these areas.
For maximum clarity for both you and your tenants, we advise making these expectations as clear as possible in the lease.
2. Health and Safety
In terms of health and safety, the majority of responsibility will fall to the tenants in commercial properties. As with upkeep and maintenance, commercial landlords will take care of health and safety matters relating to public areas – such as the lobby of an office building. This will vary depending on the property, so be sure to set clear terms in the lease agreement.
For tenants in a commercial property, there will be obligations under the lease, as well as the law. Many of these expectations are made clear under the Health and Safety at Work etc. Act 1974. This includes compliance with fire and other hazard regulations, and ensuring the following is provided within the workspace:
- A reasonable working environment that has a reasonable temperature, enough lighting, ventilation and space.
- Safe equipment and tools for completing tasks.
- Clean drinking water.
Certain hazards, like Asbestos, for example, will be the responsibility of the nominated party in the lease. Be it the tenant or landlord who oversees this, they will need to ensure all materials are removed safely, and in accordance with regulations. Failure to do so correctly can lead to heavy fines and even prosecution.
As a commercial landlord, having the right comprehensive insurance policy is essential. Each property will have unique needs, and also unique risks. No matter how well prepared you may be, there is always a chance that the worst can happen. For your own protection, as well as your tenants, you need to be properly covered with business insurance.
3. Fire, Gas and Electric
The responsibility of these three areas will vary depending on the terms of the lease, and relevant laws such as the Landlord and Tenant Act 1995.
Fire Safety: In any risk assessments done by the landlord, fire safety should be included. In some cases, the landlord may need to provide safety equipment. In most cases, evacuation procedures and fire safety protocols will be the responsibility of the tenant.
Electrical Safety: Tenants need to ensure the safety of any appliances that they buy, install, or bring into the premises. This includes everything from power tools to computers. Landlords need to ensure the property is in accordance with legal safety requirements. For example, the Landlord and Tenants Act 1985 states that the electrical system of a property must be ‘Safe at the beginning of the tenancy’ and ‘Maintained in a safe condition for the entire duration of the tenancy’.
It’s worth noting that the Electrical Safety Council recommends that full testing be undertaken every five years or between any changes of tenancy – the organisation of this will typically fall to the landlord.
Gas Safety: As with plumbing and other non-structural maintenance, gas safety is typically the responsibility of the tenant. When it comes to communal areas, however, this will fall to the landlord. The landlord also needs to provide any safety certifications the tenant may require.
4. Fixtures and Fittings
The terms fixtures and fittings are normally used interchangeably, but there is a clear distinction between the two that is widely accepted.
‘Fixtures’ are items that permanently are attached or fixed to the property such as heating or lighting systems.
‘Fittings’ are things that can be attached to the property, but aren’t as permanent – think a painting hung on the wall via a nail.
The lease agreement will outline which party is responsible for each of these individual aspects. A commercial landlord will be responsible for the fixtures and fittings that they own unless in the case they have been damaged by the tenant. The landlord needs to ensure any fixtures and fittings that they own within the property are safely installed and maintained throughout the tenancy.
Many tenants will add their own fixtures and fittings during a tenancy. These additions need to be brought to the attention of the landlord, approved in accordance with the lease, and maintained by the tenant.