Whether you’ve let out your commercial property before or are new to it, the process can be quite complex.
That’s why, in this article, Commercial Property Expert Ben Cobb has outlined how to prepare your property for letting from your obligations to finding a tenant and completion.
What is the duty of care of a commercial landlord?
Commercial landlords have a general duty of care to ensure that the property is safe for their tenant and anyone else who uses the property, such as suppliers making deliveries.
However, this responsibility can be passed to the tenant depending on the wording on the lease and whether the tenant has taken a lease of whole or part, so you should always check the lease first.
Related: Who is responsible for repairs and maintenance in commercial leases?
What are the obligations of a landlord in commercial property?
What a commercial landlord is and isn’t responsible for depends on the type and terms of the lease.
You may be responsible for the below:
- Maintaining and repairing the property, including its fixtures and fittings
- Compliance with building and safety regulations (e.g. fire safety, gas safety, electrical safety, asbestos etc.)
- Insurance
- Energy efficiency
- Heating and air conditioning
Again, depending on the lease, some of these responsibilities may fall to the tenant.
Find out exactly what your responsibilities are in our dedicated article here.
What certificates must a commercial landlord provide to its tenant before granting a lease?
A tenant’s solicitor would usually request the following on any letting:
- Energy Performance Certificate (EPC)
- Asbestos report (if required);
- Electrical Installation Condition Report (EICR) (if required);
- Gas safety certificates (if required);
- Fire risk assessment (if required);
- A copy of your option to tax (if VAT is payable on the rent);
- Any planning documentation or correspondence with the local authority you may have.
What are the EPC requirements for commercial property in 2023?
Energy Performance Certificates (EPCs) rate a property on a scale from A (highest) to G (lowest), based on its energy efficiency.
As of 2023, a commercial property must hold a valid EPC rating of E or above in order to be let out to a tenant.
If you don’t meet this rating, you would be required to undertake works to improve the rating before being able to let it.
Find out more about EPCs and the upcoming changes to them here.
How long does it take to prepare a commercial lease?
How long is a piece of string! If both parties are motivated and the solicitors are engaged, the process can be completed as quickly as 3-4 weeks.
However, if the tenant is undertaking legal due diligence, the process may be a bit longer and would typically take 6-8 weeks if both parties act quickly.
For a tailored estimate on how long your lease may take to prepare, you get in touch with our specialist team here.
What is the legal process for letting a property once a tenant is found?
The legal process is as follows…
- Both parties instruct a solicitor
- Your solicitor drafts any documentation; such as:
- Lease and a rent deposit deed
- Licence for alterations, if required
- If the tenant does not have security of tenure, the your solicitor will also prepare the notice and statutory declaration for the tenant to swear to exclude the security of tenure provisions of the Landlord and Tenant Act 1954
- Documentation is sent to the tenant’s solicitor to be agreed on and signed (due diligence may be carried out)
- Funds are sent and received
- Completion occurs, and the tenant will receive their keys
- The tenant’s solicitor will attend to any post-completion requirements with HMRC and the Land Registry.
How do you attract tenants to commercial property?
The best way to attract tenants to your commercial property is by instructing a good commercial property agent to market it.
If you would like further advice on this and/or any recommendations on agents, please don’t hesitate to get in touch with us on 01202 499255.
What terms do I need to think about for a commercial property lease?
Whilst not an exhaustive list, some of the key terms to think about for a letting are as follows:
- Length of term;
- Annual rent;
- Rent reviews;
- Break clauses
- Break clauses allow a lease to be ended early. Read our dedicated article about them here.
- Security of tenure for the tenant;
- Repairing/decorating obligations;
- Level of rent deposit;
- Personal guarantees;
- The ability to transfer/assign or sublet the lease
- Service charge obligations – what services are to be provided;
- Insurance obligations;
- Permitted use;
- Alterations and signage;
- Costs.
Do I need a solicitor to let out a commercial property?
It’s not a legal requirement to instruct a solicitor for this however, being unrepresented can make the process more difficult if you are not legally experienced and don’t understand the documentation/process.
We would usually advice that both parties (landlord & tenant) instruct separate legal representation, as it makes the process easier.
At Frettens, we can assist you in the legal process of letting out your property. According to ReviewSolicitors, our Commercial Property team is one of the best in the UK, with us ranking, as of January 2024, 1st locally and 6th nationally out of over 3000 firms.
You can get in touch for a free initial appointment here.
How can a landlord protect themselves when letting to a new tenant?
If the Tenant is an established limited company, you should take a look at the accounts of the company on Companies House. This may be harder for a newer limited company.
When you are letting to a newer limited company, you may want to consider personal guarantees or taking a larger rent deposit.
A commercial property agent may be able to assist in taking out references and performing credit checks on any potential new tenants.
Bright Commercial Property Solicitors
If you have any questions following this article, please feel free to get in touch with one of our bright experts.
We offer a free initial appointment for all new clients.
You can call 01202 499255, or fill out this form to get in touch.
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