Empty Commercial Premises: Some Issues for Landlords to Consider17 Feb 2021
Driven by pandemic related factors, some commercial landlords are facing the unwelcome prospect of their commercial premises becoming empty, for example, as a result of tenants absconding, becoming insolvent, making the decision to surrender their leases, successfully exercising break clauses, not applying for new leases or withdrawing applications for new leases.
During the time it takes to arrange a new business letting, there are a number of issues that commercial landlords may need to consider which include the following:
- implementing appropriate security arrangements for the building. We have known, for example, of situations where disgruntled former tenants have gained access to buildings and caused damage after the lease has come to an end;
- checking buildings insurance policies and notifying insurers where appropriate. There are likely to be provisions vitiating insurance cover where the building is empty or where no proper notification has been made. Be warned that it may be considerably more expensive for landlords to obtain buildings insurance covering empty commercial premises.
- checking mortgage terms and notifying mortgagees of the situation, if required, so as to avoid breaching any conditions of the mortgage.
- complying with fire safety legislation. It may be a criminal offence for landlords who fail to undertake appropriate risk assessment and other fire safety obligations pursuant to the Regulatory Reform (Fire Safety) Order 2005 that came into force on 1 October 2016. Landlords may also open themselves up to civil liability in certain situations where duties are breached and failures may lead to insurers vitiating buildings insurance. There are Government Guides available and here is a link where more information can be found: Fire safety law and guidance documents for business - GOV.UK (www.gov.uk)
- complying with statutory duties relating to asbestos. The Control of Asbestos Regulations 2012 came into force on 6 April 2012 under the Health and Safety at Work etc Act 1974. The duty holder is required to assess whether asbestos is or is likely to be present in non-domestic premises, assess the risk and manage it properly. Failure to comply with applicable duties may constitute a criminal offence and may lead to civil liability as well. Insurance cover may be vitiated. RICS is currently consulting on the 4th Edition of their draft Guidance Note on legal requirements and best practice for property professionals and their clients. Here is a link to the consultation page which contains useful information: Consultation Homepage - RICS Draft Guidance Note: Asbestos - legal requirements and best practice for property professionals and clients (4th edition) - RICS iConsult
- being aware that full business rates may become payable on the empty commercial property after 3 months (6 months for industrial units and warehousing) and checking business rates exemptions and considering options in the light of this. We address the issue of business rates in our recent blog and here is a link to that: [https://www.mwh-law.co.uk/blog/business-rates]
If you require any specific advice or assistance about any of the issues referred to in this blog or any other related issues, please contact Yvonne Addy by telephone on 0207 486 5131 or by email to email@example.com or make an online enquiry here.
This blog was prepared on 11 February 2021. It is not intended to be advice and should not be relied upon as such.