On acquiring the lease of business premises in the UK you may find that you have accepted a repairing liability. When entering into a new lease agreement it is always advisable to protect your interests by recording the condition of the premises at the commencement of the lease. Documenting the condition by means of a professionally prepared Schedule of Condition can limit your liability.

Full Repairing and Insuring (FRI) leases are popular with landlords where the term is five years or more. This type of lease places the responsibility of keeping the premises in good condition and ‘in full repair’ onto the tenant. The requirement for repair of the premises applies even if the property is in a poor state of repair to begin with and can include structural elements of the property.

The ‘insuring’ part is somewhat contradictory as it does not indicate that the tenant must insure the premises – instead the landlord insures the premises and the tenant then pays the landlord the cost of the insurance premiums.

A Schedule of Condition records the condition of the accommodation and is agreed between the parties at the point of assignment. It is then attached and referred to in the lease documentation. In most cases a professionally prepared and agreed Schedule is advised.

Even on the smallest of retail shops, dilapidation claims can run into thousands of pounds. The cost of preparing a Schedule can be a fraction of the repair bill which the tenant would otherwise be required to foot.

Further information

Contact Jack Thornton

Savills Rural