Commercial landlord responsibilities - What is a commercial landlord liable for?
Learn about commercial landlord responsibilities, including what they are liable for in commercial real estate leasing
This is the area where most of the commercial landlord’s responsibilities lie.
Under the Health and Safety Act 1974 landlords have a duty to make sure the premises are safe for occupation.
In multi-occupation buildings their responsibilities go much further, with a responsibility for maintaining common areas and providing adequate fire safety measures.
This will include signage, fire alarms, emergency lighting and fire extinguishers, maintenance and periodic testing, making sure that escape passageways are kept clear and carrying out periodic fire drills and risk assessments.
The lease plays a big part in defining who is to be responsible for what and should make health and safety responsibilities very clear, but the contract cannot override statutory rules and obligations – the landlord cannot pass on his or her own statutory duties to the tenant.
The Health and Safety Executive’s guidance is designed to make sure that everybody in a building is protected and many of these health and safety responsibilities will naturally fall on the business tenant.
However, some of these responsibilities may be shared between landlord and tenant, depending on who can be identified as the statutory “responsible person”, particularly in multi-occupied commercial premises.
The periodic risk assessments must be carried out by this person or persons.
It’s in the landlord’s own interests to make sure tenants carry out their own workplace health and safety responsibilities as an individual unit’s safety could affect the whole building.
Landlords should enforce this where the terms of the lease are being breached. Tenants are responsible for making sure their workplace is safe by complying with the Health and Safety at Work Act 1974 and with fire safety regulations.
Depending on the type of agreement (FRI or not) the landlord has repairing obligations responsibilities under Section 11 of the Landlord and Tenant Act 1985 (as amended), and this Act outlines the landlord's statutory obligations for repairs to the structure and exterior of the property in the absence of agreement in the lease.
In the case of a FRI lease, tenants will be responsible for maintenance of repairs not specified in the lease, even if not properly maintained or repaired prior to the commencement of the tenancy. This comes as a shock to many tenants when a dilapidations report is produced.
The Regulatory Reform (Fire Safety) Order 2005 sets out the main obligations of the ‘responsible person’, that is anyone who has control over fire safety in a commercial building.
The responsible person will usually be the employer (tenant) of the building in a workplace.
The landlord may be responsible for providing and maintaining equipment, depending on what the lease says, but will always be responsible for fire safety in communal areas.
Therefore, there is a shared responsibility in many cases.
Prior to letting, the landlord must obtain an Energy Performance Certificate (EPC) with a minimum rating of E or above.
After April 2023 it became illegal to lease or renew a lease on a property that does not meet the minimum standard and it is very likely this minimum standard will be tightened in future, so landlords should be thinking now about how they can future proof the sustainability of their commercial premises.
Landlords should make sure that the building is free from harmful asbestos prior to letting by having an asbestos survey carried out and arranging removal if necessary.
Otherwise, the lease should specify whether asbestos is the landlord or the tenant’s responsibility during the lease term.
There are serious penalties for failing to manage asbestos correctly.
Duty holders, including employers, landlords, managing agents, those in control of premises and those with health and safety responsibilities for others, need to comply with their legal duties in relation to legionnaires disease.
These include identifying and assessing sources of risk, preparing a scheme to prevent or control risk, implementing, managing and monitoring precautions, keeping records of precautions and appointing a manager to be responsible for others.
The landlord is responsible for providing equipment that is safe and legally compliant in the first instance, for example gas central heating boilers, but the lease will usually specify that the tenant is responsible for ongoing maintenance, including annual gas boiler servicing and safety checks.
Responsibility for gas safety may be the landlord’s or the tenant’s responsibility, or both, depending on the situation and the terms in the lease.
Most likely the tenant will be made responsible for maintaining gas equipment and making sure that occupants are safe from fire and CO and other risks through regular risk assessments of dangerous substances.
Maintenance must be carried out according to the equipment manufacturer’s instructions and annual gas checks by a registered gas safe engineer.
A commercial landlord has a legal responsibility to make sure that the building’s electrical system is safe.
The Landlord and Tenants Act 1985 specifies that the building’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 same Act of 1984 apply and make it clear that a landlord’s duty of care extends beyond the tenant to occupants and anyone who visits their property, including workers and customers – for instance, office workers or shop customers.
Prior to letting commercial premises, landlords should have an Electrical Condition Report (EICR) prepared by a registered electrician.
This test should be repeated every five years.
In the meantime, the safety and maintenance of any electrical appliances they own is the tenant’s responsibility and, depending on the terms, of the lease they may be responsible for maintaining the whole electrical installation is a safe condition.
Landlords are responsible for the safety of all electrical and gas installations in communal areas.
The code for leasing business premises in England and Wales 2023 sets out the recommended responsibilities of commercial landlords and tenants.
This is a joint voluntary Code prepared by industry regulatory bodies: RICS, The British Council for Offices, the British Retail Consortium and the Confederation of British Industry.
The code includes guidance on commercial tenancies, including:
lease negotiations
lease length, right of renewal, break clauses
insurance
rent guarantees and deposits
rent reviews
service charges
alterations and changes of use
assignments and subletting.
The Code, although voluntary, sets out best practice and helps at the negotiation stage of lease drafting.
