Insurance Obligations for Commerical Tenants | LegalVision UK (2024)

FAQs

Insurance Obligations for Commerical Tenants | LegalVision UK? ›

As a commercial tenant, it is not typically your responsibility to make any arrangements for the building insurance policy. This will only be the case if you lease the entire property long-term. In this case, the building insurance will likely need to be in both your's and your landlord's names.

Commercial landlords have a duty of care to their tenants.

The main health and safety responsibilities for landlords include: Maintenance and repair of any fixtures and fittings they own. Maintenance of the electrical system. Compliance with gas safety responsibilities.

Is tenants' insurance required in the UK? No, there's no legal requirement to take out tenants' insurance. But it's risky not having any in place – as your landlord's insurance won't pay out if any of your possessions are stolen or damaged, even if it covers the furniture they've provided.

Buildings Insurance

Usually, a commercial landlord or the person who is the legal owner of your commercial property is responsible for both arranging and paying the building insurance for your commercial premises. This is because they have an 'insurable interest' as the freeholder, landlord or owner.

The Landlord and Tenant Act 1954 (the Act) was created to provide security of tenure to Business Tenants. If the Act applies the relevant business tenancy will not automatically come to end upon the expiry of the contractual term of a lease provided the tenant remains in occupation for the purposes of a business.

Commercial landlords have to give sufficient notice by law. For example, if a tenant is being evicted for not paying rent, the landlord must serve the notice at least seven days before taking action before entering the premises and recovering the tenant's goods to sell them to cover rent arrears.

Negotiation costs

Each parties' solicitors will then exchange any revisions until a final version is agreed. The landlord may have to pay over £1,000 in legal fees, depending on how much negotiation is needed. However, tenants often meet some or all the landlords' legal fees.

There's no legal obligation for a landlord to take out a dedicated insurance policy. However, a conventional home insurance policy won't cover you for rental activities, and if you have a mortgage on your property it's very likely that your lender will require you to take out insurance before you take on tenants.

Public liability insurance isn't compulsory. In fact, in the UK, the only compulsory cover is employers' liability insurance, which is a legal requirement for most businesses that employ staff.

You do not legally need tenants insurance, so it's your choice. But you need to think about whether you could afford to replace your belongings if something like a burglary or fire were to happen. You will not need to take out buildings insurance though, because that's your landlord's responsibility.

What is commercial property law UK? ›

Commercial Property Law involves dealing with business properties or land that generates profit for the owner.

Commercial building insurance covers your office, shop or property connected to your operations against events that are out of your control. A policy will typically include cover against fire, flood, theft and even malicious or accidental damage.

The continued impact of catastrophic events is a major factor driving up costs, along with the increasing cost of capital, financial market volatility and inflation. This is an expense carriers need to pass along to customers.

As a commercial landlord, you will generally need to ensure that the property and overall building are safe for your commercial tenant's occupation and others who may use the building before you lease it. Your obligations will heavily depend on the type of property you own.

Your landlord can refuse to renew your lease if: you're in breach of your obligations (for example, you've not paid your rent) they want to use the premises themselves, for their business, or to live there.

The tenant can continue to occupy the property under the same agreement until they decide to leave or the landlord serves notice to terminate the contract. Remaining in a property after the lease expires is termed 'holding over. '

Usually commercial leases are granted for a “fixed term” which means that the lease begins and end on specific dates. However, either party may be able to terminate the lease earlier if there is a Break Right in the lease. The landlord cannot raise the rent during the fixed term period.

A commercial property lease usually continues until its end date unless it includes a break clause. A break clause is a line in the lease that allows the landlord, tenant or both to end a lease early without facing a penalty. It includes an agreed date when the lease can be ended.

As a landlord you must: keep your rented properties safe and free from health hazards. make sure all gas equipment and electrical equipment is safely installed and maintained. provide an Energy Performance Certificate for the property.