Part 6 – Outgoings
With the exception perhaps of leases within, say, an office block, a tenant can normally expect to be responsible for all the outgoings for their property, including the buildings insurance. All utilities will need to be registered in the tenant’s name, although some leases restrict the tenant’s ability to change supplier. The tenant will also be responsible for the business rates. Aside from the obvious reason, this has another benefit for the landlord in that if the tenant fails and goes out of business, the landlord can wait to terminate the lease until they have a new tenant, and the outgoings remain a debt of the original tenant in the meantime.
Many properties will form part of a larger building or estate, such as a shopping centre, office block or industrial estate. Accordingly, charges will likely arise for the maintenance and upkeep of any common areas. Landlords will customarily pass such charges on to the tenants, in addition to the rent. Sometimes, the landlord will in fact own the larger building or estate so the lease will contain detailed provisions for how such charges are calculated and paid.
In this series of articles, we are aiming to give you a brief overview of the principal areas covered by a commercial lease. These articles are for guidance only and do not represent legal advice. If you need advice or assistance on leases or any other property concern, please do not hesitate to contact Andrew Rannie, Head of the Property Department for a free initial consultation.