Commercial landlord advice: The basics

Whether you’re new to being a commercial landlord or looking for little tips and tricks to help you along your way, this guide provides commercial landlord advice to help you navigate the complexities of commercial landlord laws and succeed in your rental ventures.

It will showcase the key differences between commercial and residential letting. It will go on to highlight the importance of service charges, health and safety regulations and insurance.

Difference between being a commercial landlord and a residential landlord

Firstly, it is essential to understand the difference between commercial and residential leases. A residential lease is when a landlord rents their property for someone to use as their home. A commercial lease is when a landlord lets a property for business purposes, like an office block, warehouse, or a shop on the high street. This article will provide commercial landlord advice.

Commercial leases

Residential leases often last six months to a year with limited room for negotiation from either party involved. Commercial leases are completely different and typically last much longer. It’s common to see commercial leases last 10-20 years, with some even lasting significantly longer. When being a commercial landlord, you’ll find that negotiations play a huge role in shaping leasing terms. 

Commercial landlords should expect break clauses (allowing either party to terminate early), rent reviews (to adjust rent in line with market conditions), and clearly defined responsibilities for repairs and maintenance. It’s vital to seek commercial landlord advice when making a lease. A poorly drafted lease can lead to disputes.

What is security of tenure?

The importance of a well-drafted lease is further highlighted by the Landlord and Tenant Act 1954. If the landlord is not paying attention, the security of tenure rules can catch landlords off guard and lock them into unwanted commitments.

Security of tenure gives the tenant a statutory right to renew the lease when the contractual term ends. This is granted by part II of the Landlord and Tenant Act 1954. A security of tenure is only applied to tenants who are using the premises for business purposes and have an agreement lasting more than six months. Landlords are only allowed to oppose a tenant’s statutory right to a new lease on the seven grounds listed in Section 30(1) of the LTA 1954.

Importance of service charges

Service charges are fees a landlord bills a tenant under a commercial lease to cover the cost of shared services. A service charge comes on top of regular rent and is designed to shift some or all of the landlord’s expenses for managing shared spaces and facilities in multi-tenant sites and buildings to the tenant(s). It’s common commercial landlord advice to include this.

Service charges must be transparent and reasonable, often covering maintenance of common areas. 

Health and safety regulations 

The Health and Safety at Work Act 1974 puts significant responsibility on commercial landlords to ensure their premises are safe for all tenants and visitors. It extends beyond maintaining the physical structure of the building. It also covers a wide range of health and safety considerations. Here is general commercial landlord advice when it comes to responsibilities:

• General safety: Landlords must take all reasonable steps to ensure that the premises are free from hazards that could cause injury or illness. This includes maintaining the building’s structure, electrical systems, plumbing, and other essential services.
• Fire safety: Fire safety is a critical aspect of a landlord’s responsibilities. This includes installing and maintaining fire alarms, emergency lighting, fire extinguishers, and clear signage. Landlords must also ensure that escape routes are kept clear and unobstructed and that regular fire drills and risk assessments are carried out.
• Asbestos management: If the building contains asbestos, the landlord has a duty to manage it safely. This includes identifying the location of asbestos-containing materials, assessing their condition, and taking appropriate action to manage the risks.
• Gas safety: Landlords are responsible for ensuring that gas appliances and installations in their properties are safe. This includes arranging for annual gas safety checks by a Gas Safe registered engineer.
• Electrical safety: Landlords must ensure that electrical installations in their properties are safe. This includes arranging for periodic electrical safety checks by a qualified electrician.

Multi-tenant buildings

The responsibilities of commercial landlords increase in buildings with multiple tenants. In such cases, the landlord must ensure that common areas, such as hallways, stairwells, and elevators, are safe and well-maintained. They must also coordinate with tenants to ensure that fire safety measures are in place and that all occupants understand emergency procedures.

Lease agreements and statutory duties

While landlords can outline responsibilities in the lease agreement, they cannot pass their statutory duties onto the tenant under commercial landlord laws. The landlord remains ultimately responsible for ensuring that the premises comply with health and safety legislation. If you fail to do so when being a landlord, it can result in legal action, including fines and, in serious cases, imprisonment.

Importance of compliance

A landlord must ensure compliance even if a lease puts specific responsibilities on the tenant. It can seem stressful, but it can be managed efficiently with proper planning. This includes scheduling regular inspections, speaking to professionals about safety inspections, documenting records and scheduling regular communication with tenants. 

Professional advice 

Understanding and working with commercial landlord laws and managing a commercial property isn’t always straightforward. Common commercial landlord advice highlights the importance of professional guidance when being a commercial landlord.

Solicitors can ensure your lease complies with the Landlord and Tenant Act 1954 and other commercial landlord laws, while chartered surveyors can advise on property condition and compliance. Being a commercial landlord means balancing legal requirements with best practices, and experts provide the foundation for success when managing your commercial property.

Unexpected things can happen when being a commercial landlord, so getting commercial landlord insurance is vital to secure your investment. Contact us at CIA Landlords to find out more. We’ll compare landlord insurance quotes and find you the cheapest deal. Get a quote today, or give us a call at 01788 818 733 to speak to one of our friendly advisors.