Tenants beware of repair obligations in a commercial lease

The judgement in the recent case of Stonecrest Marble Limited v Shepherds Bush Housing Association Limited [2021] EWHC 2621 (Ch) is a reminder to all tenants of the importance of carefully reviewing a commercial lease of part, to make sure the landlord is under an obligation to maintain and keep the whole of a building in repair.

The tenant occupied the ground floor unit under a commercial lease. The upper floors of the building were residential and within the landlord’s control.

The case concerned damage to the tenant’s property, which was caused by water ingress due to a gradual build-up of debris, resulting in a blocked downpipe. The damage was considerable and prevented the tenant from being able to use the property for its permitted use.

Under the terms of the tenant’s lease, the landlord was required to:

• Allow the tenant quiet enjoyment of the property;
• Clean, maintain and repair the ‘common parts’; and
• Insure against the ‘insured risks’ which included ‘flood…and overflowing of water…apparatus’

The lease did not define the upper parts of the building as ‘common parts’ and so the landlord was not under an express obligation to keep the retained parts of the building in repair.

The landlord’s insurance policy itself did not cover this type of damage, as gradual deterioration and wear and tear were excluded from the policy. The damage was therefore not an insured risk and, under the lease, the landlord was not required to carry out repairs for which the landlord was not required to insure.

The court was unwilling to infer any additional obligations on the landlord as the lease was a professionally drafted document that contained a comprehensive scheme of repair and insurance, despite the tenant having continuously flagged the damage to the landlord from the outset and not being in a position to prevent the damage itself.

What should a tenant do?

When taking on a lease, a tenant should always obtain legal advice and instruct their solicitor to review the lease terms carefully. Also, if the lease is a lease of part, where possible the landlord should be responsible for keeping the rest of the building in repair.

Depending on the negotiating power of the parties, a tenant may also want to push all liability for damage by uninsured risks on the landlord. This is usually negotiated at the beginning of a transaction, when heads of terms are being finalised by both parties: instructing an experienced surveyor to negotiate these terms is therefore also important.