Commercial Landlords’ Legal Responsibilities
All commercial property landlords have one goal in common; to maximise rental income whilst safeguarding and maintaining the property so that it realises its full market value upon sale.
Commercial property comes in a huge variety of shapes, sizes, uses, and values but all commercial landlords are subject to the same health and safety regulations and duties to their tenants (i.e. to take reasonable measures to ensure that the premises that they control are safe and comply with any regulations).
However, commercial landlords leasing non-domestic premises can often be unclear as to the extent of their duties and obligations.
Below, we set out some of the key areas in which landlords need to understand their duties:
- Air Conditioning
Systems must be regularly tested to assess energy efficiency and effectiveness. If the system was put into service after January 2008 the first inspection must take place within five years of the system being put into place.
There is an obligation to ensure that all commercial premises have been properly surveyed for the presence of asbestos. If asbestos is found on the property it may not be necessary to remove it, however penalties for not managing asbestos are severe: loss of directorship, up to two years in prison, or a fine (£20,000 for an individual and unlimited for a company)
- Disability Discrimination
The Disability Discrimination Act places a duty on landlords to make reasonable adjustments to remove physical barriers for those who are less able bodied. Landlords have to make reasonable adjustments when negotiating a new Lease or understanding the needs of existing tenants.
- Electrical/Gas/Fire Safety
All electrical systems in the property must be checked on a regular basis to ensure that the system complies with current regulations. Commercial properties need to have a certificate updated every five years, or every change of occupancy.
Owners, employers and tenants have a collective obligation to ensure that their premises are fire safe. Although evacuation procedures will probably be the responsibility of the tenant, details should always be included within the Landlord’s Fire Risk Assessment.
The Landlord will need to ensure that a registered gas safety engineer inspects the property on a regular basis however any gas appliances supplied by the tenant will be their responsibility.
- Energy Performance Certificate (EPC)
Before a tenant moves into a property the Landlord has to provide them with an EPC.
From 1 April 2018, landlords of non-domestic private rented properties (including public sector landlords) may not grant a tenancy to new or existing tenants if their property has an EPC rating of band F or G (shown on a valid EPC for the property).
The penalty for failing to comply with the above regulations is a fine of up to £5,000.
Any insurance must place the Landlord in the same position as before the destructive incident occurred.
It’s usual for a landlord to arrange the insurance of a building and seek reimbursement from the tenants. However, in addition to standard buildings insurance, landlords must also consider Public Liability Insurance and insuring for loss of rent.
The Lease will usually dictate the risk that the Landlord is obliged to insure.
As you can see from this brief insight, there are quite a few things that commercial landlords need to do to stay within the law.
Any landlord or tenant obligations should be clearly defined in the Lease, with some hefty fines imposed on those who don’t comply with regulations!
If you are a commercial property landlord and require support with identifying your obligations, or drafting the terms of a new Lease, please don’t hesitate to get in touch with a member of our Property team today.