08 January 2014

Court gives guidance on tenants' liabilities to repair at end of lease of new property

Landlords and tenants of premises originally let as new will welcome judicial guidance on a tenant's repairing obligations at the end of the lease under standard repairing covenants - particularly in relation to roof lights which can be expensive.

A tenant was nearing the end of a 15-year lease of a warehouse and offices. The lease contained the usual full repairing obligation, to put the property back in the condition reasonably fit for occupation by the class of tenant likely to take the premises at the beginning of the lease.

However, the property had been brand new at the beginning of the tenancy and the relevant 'class of tenant' was, therefore, a tenant looking for brand new premises. Much of the disrepair to the building – discoloured roof lights, wear and tear on the concrete floor, damage to doors and cladding, dirty walls - would have been acceptable to a tenant taking a lease of the property now, as a 15-year old property, but not to a prospective tenant looking for new premises.

The High Court gave useful guidance on what this meant in relation to particular items of disrepair:

  • Outside cladding: the landlord was entitled to claim for its repair, even though the damage was mostly minor, and not structural.
  • Doors to the loading bay: the landlord could claim for their repair, even though damage was usual and no more than a "minor aesthetic blemish".
  • Dirty warehouse ceiling: the landlord could claim for attempts to clean this, even though it turned out to be impossible to get it clean.
  • Warehouse elevation: the tenant had cleaned one elevation but not the other. The landlord therefore had both cleaned. The tenant was liable for the cost of cleaning the uncleaned one, but not the cost of cleaning the other for a second time – even though it looked much better after the second cleaning.
  • Concrete warehouse floor: the landlord could recover costs of repairing areas where the aggregate underneath was showing through.
  • Roof lights: the landlord could claim for the costs of repairing/cleaning the roof lights so they let in the same amount of light as at the start of the lease, were weather-proof and were structurally sound. It said there had been a visible and significant worsening in the light let in by the roof lights, in that artificial lighting had to be used in circumstances where it would not have been required when the property was first let.

The roof lights were just one example of the large items of expenditure that may be required where a lease of a property expires in order to put the property into the condition required by the terms of the lease. Very often Tenants fail to give proper consideration to such potential liabilities in planning the strategy for their move from premises.

Recommendation

Landlords and Tenants of properties should seek professional advice in relation to the repairing, and other obligations, in leases well in advance of the expiry of the lease and should then work with their professional teams to put in place appropriate strategies to minimize risk.

For more information please contact Michael Watson at Shulmans on 0113 297 1850 or at mwatson@shulmans.co.uk.

Case ref:

Twinmar Holdings Ltd v Klarius UK Ltd & Anor [2013] EWHC 944