In Part two of this two Part blog, Icon Surveyors will be considering what a New Commercial Lease is and why it is important to make sure there is a Schedule of Conditions in place?
What is a New Commercial Lease?
In the simplest of terms, a "New Commercial Lease" is a lease that a tenant takes out for the sole purpose of running a business. There are many protections afforded to a "commercial tenant" under the Landlord and Tenant Act 1954, particularly a commercial tenant’s security of tenure. What this effectively means is that a business tenant has the right to remain in occupation at the end of the term of the lease and either agrees with the landlord to extend the lease or applies to the court for an extension of the lease. However, there are also obligations pertaining to the maintenance and repair of the rented property to which both the landlord and tenant must adhere, for any breach thereof will only serve to strengthen the position of any party that has suffered as a result.
The obligations to repair in new commercial leases are governed by the terms of the lease. These are very different to those agreed upon between residential tenants and their landlords. Generally speaking, obligations to "repair and maintain" are usually shared between the landlord and tenant of a commercial lease. The word that is often used by lawyers, to refer to such obligations under such leases, is that of dilapidations. These relate to disrepairs, or, any maintenance and repairs that are required during the term of and at the end of, a lease.
The obligations to maintain the internal non-structural parts of the rented property and to leave it in the condition it was in when the lease commenced are usually those of the tenant. This will usually include the wiring and plumbing of the internal unit. Dilapidations and their extent are usually specified within the terms of the lease. This will depend largely on the commercial usage of the property. Those dilapidations that are not so specified may also fall under the responsibility of a tenant. These days, it is not uncommon for commercial landlords to include a clause stipulating that the tenant be responsible for "Full Repairs and Insuring." In other words, the tenant under such a clause will be wholly responsible for all of the repairs and any requisite insurance.
With regard to a landlord’s obligations to maintain and repair under the terms of a commercial lease, generally speaking, such responsibility usually concerns the structural fabric of the building and its common parts. That is to say, for example, the roof, the subfloor, external drains, or walls.
For the above-stated reasons, Icon Surveyors are of the belief that a Schedule of Conditions for a New Commercial Lease is imperative for the protection of both a landlord and a tenant.
Icon Surveyors are happy to provide a free consultation to any building or adjoining owners who may be affected by the subject matter raised in this blog.