Commercial landlords have a duty to make sure that their business property is safe for their tenant and anybody else using their building. There is often confusion about who is responsible for which aspects of health and safety, landlord or tenant. That’s because business property lettings are not as clear-cut as residential property lettings. There is considerable variation between individual properties and lease agreements, plus landlord’s and tenant’s responsibilities can overlap. Commercial conveyancing is complex, so it is important to seek advice from our specialist commercial property solicitors to ensure a successful tenancy.
Health and Safety
There are certain legal responsibilities that all commercial landlords have. In many cases, the greatest level of responsibility lies with the tenant, but it very much depends upon what is written in the lease agreement.
Under the Health and Safety at Work etc. Act 1974, tenants are always responsible for complying with Fire Safety Regulations (see below) and for providing a workplace with:
- A reasonable temperature
- Adequate lighting, space and ventilation
- Drinking water
- Safe equipment
- Toilets and washing facilities.
Landlords are responsible for health and safety matters relating to communal areas, and this will be detailed in the lease.
Fixtures and fittings
‘Fixtures’ are items that are attached to the property such as heating or lighting systems. ‘Fittings’ are things which are not attached to the property other than by a nail in the wall e.g. a picture. A commercial landlord is responsible for all the fixtures and fittings they own and these must be safely installed and maintained properly.
The tenant is responsible for the safety and maintenance of any fixtures and fittings they have installed, and that should be clear in the lease.
Gas and electricity
Responsibility for gas safety may be the landlord or the tenant’s responsibility, or both – it depends upon the conditions set out in the lease. The tenant will normally be responsible for maintaining gas equipment according to the manufacturer’s instructions. This is likely to mean arranging an annual inspection by a registered gas safety engineer. The tenant will also be responsible for maintaining any gas equipment that they have installed themselves.
A commercial landlord has a legal responsibility to ensure that a property’s electrical system is safe. The Landlord and Tenants Act 1985 states that a property’s electrical installation must be ‘Safe at the beginning of the tenancy’ and ‘Maintained in a safe condition for the entire duration of the tenancy’. The Occupiers’ Liability Act 1957 and the Occupiers’ Liability Act 1984 are clear that a landlord’s duty of care extends beyond the tenant, to anybody who visits their property – for instance, office workers or shop customers.
Before letting out a property it is advisable for a commercial landlord to have their property surveyed and an Electrical Condition Report (EICR) written by a registered electrician who will also need to inspect the property at least once every five years.
Tenants are responsible for the safety and maintenance of any electrical appliances that they have bought or installed. Depending upon what is stated in the lease, they may also be responsible for maintaining all electrical equipment in the property according to manufacturer’s instructions which includes organizing regular safety inspections by an electrical safety engineer.[1]
Commercial landlords are usually responsible for the safety of all electrical and gas installations in communal areas. Landlords are also responsible for ensuring that newly let commercial properties have an Energy Performance Certificate (EPC) rating of E or above. From April 2023 it will be illegal to renew a lease on a property that does not meet the minimum standard.
Maintenance and repair
The responsibilities of landlord and tenant will be clearly set out in the lease. Normally commercial landlords are responsible for any structural repairs such as foundations, flooring, roof and exterior walls, and tenants are responsible for non-structural repairs such as air conditioning or plumbing.
Tenants are usually responsible for any maintenance and repairs not specifically identified as the landlord’s responsibility in the lease. The lease may specify that the tenant must keep the property in good condition, even if the property wasn’t maintained to the same standard at the start of the lease – this is called a ‘full and repairing lease’.
Asbestos
The lease will specify whether asbestos is the landlord or the tenant’s responsibility. Whoever is responsible will need to follow the Health and Safety Executive’s guidance to make sure that everybody in the building is protected.[2] Failure to manage the risk of asbestos is dangerous and carries heavy penalties. In 2011 Marks and Spencer were fined over £1m for failing to protect customers, staff and workers from asbestos.[3]
Fire safety
According to the Regulatory Reform (Fire Safety) Order 2005 the ‘responsible person’ has control over fire safety in a commercial property. The responsible person will usually be the employer if the property is a workplace, so this will be the tenant. However, the landlord may be responsible for providing equipment such as fire blankets and fire extinguishers, depending upon what is specified in the lease. Landlords will always be responsible for fire safety in communal areas.[4]
The code for leasing business premises in England and Wales
The code for leasing business premises in England and Wales 2007,[5] clearly sets out the responsibilities of commercial landlords and tenants. There is no legal obligation for landlords to follow the Code but it is authorised by regulatory bodies including the British Council for Offices, the British Retail Consortium and the Confederation of British Industry. The code covers:
- Alterations and changes of use
- Assignment and subletting
- Insurance
- Lease negotiations
- Ongoing management and service charges.
- Rent guarantees and deposits
- Rent reviews
- Service charges
- Term lengths, renewal rights and break clauses.
The Code is useful for commercial landlords because it sets out best practice and shows what their competitors might be offering.
How to get onto the commercial property ladder
If you need a loan, a commercial mortgage is generally considered the best way to finance the purchase of a commercial property. Commercial property mortgages usually have lower interest rates than business loans because they are secured against a property. A whole-of-market mortgage broker will be able to help you to find the best possible deal.[6]
At Insight Law we can guide you through the commercial mortgage application process, making sure you understand your obligations and ensuring that all the paperwork is in place to help you to secure finance quickly.
When you apply for a loan you will be asked to include a business plan, details of your business accounts and bank statements, identification documents, lease and/or tenancy agreements.
If a commercial mortgage is not right for you there are several other options you could consider:
- Bridging loan. A bridging loan is a short-term option, and you can borrow money for a year or less. This is suitable if you have a clear financial exit strategy in mind.
- Business loan. Some loans offer sums of up to £30,000 over the course of a year and others will allow you to borrow more money over a longer period of time.
Why choose Insight Law?
Whether you are a new or a seasoned commercial landlord, Insight Law’s commercial conveyancing team will work hard to help you to achieve the very best return on your business property investment.
Our solicitors go the extra mile for all our clients including drafting lease agreements which are the cornerstone of successful tenancies, and attending site visits and briefing sessions whenever needed.
We promise you absolute dedication to understanding your property business by gaining a full picture of your objectives so that we can tailor our service to your needs.
Contact our commercial property solicitors on 02920 093 600 for a free consultation.
[1] GOV.UK, Renting a business property: tenant responsibilities, https://www.gov.uk/renting-business-property-tenant-responsibilities
[2] HSE, What to do if you discover or accidentally disturb asbestos as at work, https://www.hse.gov.uk/pubns/guidance/em1.pdf
[3] BBC News, Marks & Spencer fined £1m over asbestos risk, https://www.bbc.co.uk/news/uk-england-berkshire-15081278
[4] GOV.UK, Fire safety in the workplace, https://www.gov.uk/workplace-fire-safety-your-responsibilities
[5] The Joint Working Group on Commercial Leases 2007, The code for leasing business premises in England and Wales, https://www.bpf.org.uk/sites/default/files/resources/The%20Code%20for%20Leasing%20Business%20Premises%20in%20England%20and%20Wales%202007%20%E2%80%93%20full%20suite%20of%20documents.pdf
[6] Money Super Market, About commercial mortgages, https://www.moneysupermarket.com/business-finance/commercial-mortgages/