Being a landlord has a lot of responsibility, and you may be worried about what legal obligations you have. At Foys, our commercial property solicitors offer expert advice and answer five of the most common commercial landlord questions.
Whether it’s an office building, retail store or leisure facility, a commercial landlord is a business owner with many responsibilities. These responsibilities will differ from those associated with renting out a residential property. Generally, you will have a duty to ensure your premises are well-maintained, secure, safe and healthy places for people to operate.
Being a commercial landlord offers you the potential for long-term and stable income, as well as an opportunity for capital growth. To make the venture successful, it is best to have competent legal advice and this is where Foys come in.
Foys can review your lease with you and discuss the practicality of becoming a successful commercial landlord. In this post, our expert property solicitors answer five of the most common questions asked by commercial landlords.
Here are the most common questions asked by commercial landlords:
Am I responsible for the maintenance of the property?
This would usually be laid out clearly in the lease. Generally, tenants should keep the premises in good condition and take responsibility for any damages incurred (dilapidations). However, if the tenant is only renting out a space within a larger property owned by a landlord, the landlord may be responsible for the overall functionality of the building itself.
Typically, a landlord is responsible for maintaining the general upkeep of a commercial property, making repairs when necessary. This could be fixtures and fittings found therein. It is very important that you lay out what duties you have in the lease. A good lease determines your rights and responsibilities and gives you protection in most situations. If any potential disputes arise over maintenance, it will be a good point of reference to make your case.
Some tenants will take on a Full Repairing and Insuring (FRI) Lease, and this means the tenant will take on all repair costs and insurance for the property. Normally, a tenant would survey the property before entering into such an agreement. This could act as a bargaining tool for the tenant, in the negotiation of the lease.
What other charges may I incur as a commercial landlord?
When you take on a commercial property, there may be other costs involved. Ideally your income from rent will cover these costs, but it is a good idea to keep money aside to cover any additional expenditures. These can include mortgage payments, letting agent fees (if you choose to outsource the management of the property), taxes, insurance costs (if outlined in the lease) and any legal and administrative fees.
The commercial property solicitors at Foys can advise a landlord on the risks associated with renting a commercial property, the types of insurance that make the most sense for the property and how to prepare for additional costs. We can help you decode all the legal jargon and lay-out the process of preparing a lease agreement that suits you and your needs.
What documents do I need to have as a commercial landlord?
There are several documents you need to be aware of as a commercial landlord. Some are required by law, and some are just good practice. They include an Energy Performance Certificate (EPC) – currently landlords are not allowed to rent out properties with a rating below E, any documentation associated with an accredited asbestos survey and gas and electrical survey certificates – given at the beginning of the tenancy and after each inspection.
Having a good tenancy agreement is also vital in determining what responsibilities you have as a commercial landlord. This will lay out who is responsible for maintenance and taxes and agree on rent and terms of the lease.
It is also a good idea to compile inventories for your property, so you know if anything is missing or damaged during the tenancy.
What other responsibilities do I have as a commercial landlord?
Depending on the lease, a landlord may be responsible for ensuring that health and safety regulations are met, including proper ventilation, water supply and cleanliness. If the property is in a state of disrepair, you may need to sort this out before it can be offered to tenants.
This also extends to fire safety. In the context of commercial properties, The Regulatory Reform (Fire Safety) Order 2005 (The Order) imposes various duties on the ‘responsible person’ – this can be the landlord or the tenant, or sometimes a combination of both. This can be carrying out risk assessments or ensuring emergency exits. A landlord may also need to provide a safety engineer and registered gas-safe engineer to check the property regularly. You may also need to provide tenants with a reliable fire alarm system and fire extinguisher.
Under what circumstances can I evict a tenant?
Occasionally, you may find yourself in a situation where you wish to take back the premises from a tenant – this can be due to rent being in arrears, damage or general disrepair, subletting the property without permission or being an annoyance to neighbours. It is imperative, however, that you follow the correct eviction process.
The Landlord and Tenant Act 1954 dictates that tenants of a business property may renew the lease and remain on the premises at the end of the lease term. There are some exceptions to this. If you would like to discuss the possibility of including or excluding security of tenure, you can contact Foys team of property solicitors, so you can legally decline to renew a lease.
A landlord who wishes to end a commercial lease must give the tenant six months written notice, and indicate whether they are open to a new tenancy agreement. There are strict guidelines for these notices, and it is recommended that a landlord consults a specialist commercial property solicitor, like those at Foys before they take action.
Foys can help commercial landlords
There are many groups and services that a commercial landlord can turn to for support and advice. Landlord associations and letting agencies may be able to help with the management of your property and offer assistance in dealing with tenants. However, when considering a commercial lease, it is always a good idea to get in contact with a reputed specialist commercial property solicitor. At Foys, we are the legal authority on commercial business matters in Yorkshire, Nottinghamshire and Derbyshire, and have over three decades of experience in offering excellent services to commercial landlords. We can advise you on insurance, taxes and tenancy disputes.
We know that hiring a lawyer can be expensive, so we offer a FREE initial consultation, where we can discuss your case and give you an idea of costs. To find out more, give us a call on 01302 327 136, or alternatively, you can fill out our Online Form.
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