Landlords will usually seek to make tenants liable for repairing a building. A commercial landlord will wish the rent as far as possible to be pure profit, all other costs being paid by the tenant.
- Where a tenant is granted a lease of part of a building, the landlord usually requires the tenant to repair the internal parts of the building. The cost of repair of the structural and external parts of the building are passed on and divided up between the tenants under a service charge [Service charge]
- Where a lease requires a tenant to repair a property, or to keep a property in repair, (a “full repairing obligation”) the tenant must put the property into full repair even if it is in a poor state of repair at the start of the lease term.
- In the case of a very long lease (say of 25 years duration or more) it is often reasonable in principle for the tenant to take on a full repairing obligation. However, even then the tenant should use a surveyor to check that the property is in good repair at the start of the lease, and if this is not the case, require the landlord to pay for the cost of putting the property in repair, perhaps through a concessionary rent, rent free period, carrying out the works themselves or paying for the tenant to do so.
- Under a shorter term let, where the property is fit for purpose but not in a full state of good repair both the landlord and the tenant may agree a more limited obligation, commonly to keep the property in at least its existing state of repair, usually as evidenced by a “schedule of condition”. This may be simply a set of photographs with or without commentary by a surveyor. Where there is a schedule of condition, it is sensible to exclude also any liability for disrepair arising because of existing defects in the property (for example water leakage, or dry rot).
- The tenant may specifically ask for a break right to terminate the lease if, for example, the cost of repair is going to exceed a specific sum in any particular year, or the building is unusable because of some progressive defect for which the tenant is not liable. [Break rights]
- The tenant may also seek to agree an exclusion for any liability for fair wear and tear. This means that the tenant will only be liable to pay compensation to the landlord for disrepair if particularly heavy damage is caused to the property, and the incident is not covered by the landlord’s property insurance.
- For very short leases, it is sensible to include no requirement for the tenant actually to repair the property, but simply to state that the tenant shall not damage the property, and shall not be liable for such damage in so far as it is covered by the landlord’s insurance.
- In the case of new properties or newly refurbished properties the landlord should be responsible for any repair that is due to faulty workmanship or materials in connection with the works. This is particularly the case because the landlord should be able to recover compensation from the contractors or professionals involved with the works.