Commercial property investment: what landlords need to know.

Commercial Property Investment - What landlords need to know.

Ready to push the button on your commercial property investment? Before you do, here’s what you need to know.

What are your responsibilities as a landlord?
This may come as a surprise to some, but your responsibilities as the owner of a commercial property investment are not the same to that of being a residential landlord. In fact, there are more benefits to being a commercial landlord, and the law often favours the landlord in cases such as a tenant not paying rent. And, unlike residential properties, a lot of the major responsibilities when it comes to the property are actually shared between the tenant and landlord.

But of course, there are some obligations that do rest on your shoulders, the most important being health and safety. While it’s true that both parties have equal duty to ensure the property is safe and well maintained so that people are able to work there, you will need to perform risk assessments regularly. The remainder of the maintenance, and whose duty it is, is outlined both in law and in the lease agreement.

As a landlord you will be responsible for gas and electrical safety (and you will also need to conduct regular checks by a registered gas safe engineer); Asbestos management and/or removal; the proper installation of any fixtures, fittings and electrical equipment; and also fire safety. In addition, it is also your duty to perform general maintenance, upkeep and repair of the building (provided it’s structural or related to a fault in the building itself). The tenant will generally be responsible for providing toilets and washing facilities, drinking water, adequate space, lighting and ventilation, a reasonable temperature and safe equipment.

The safest bet when it comes to health and safety is to outline these responsibilities (and who they fall upon) in your lease agreement, as this will safeguard you later down the track should any issues arise.

Insurance – do you need it?
The questions isn’t if you need insurance (because if you’ve outlaid your hard-earned money, protecting your asset should be a given) but more, what type of insurance you need for your commercial investment property. It may be tempting to go for the cheapest options, and perhaps be a little untruthful about the property in order to get the best deal, but remember, this is your investment safety net. If something does go wrong, you want to make sure you (and your money!) are looked after, and the only way of guaranteeing this is with the right kind of insurance cover.

If you needed any more convincing of the importance of high quality insurance, you only need look to the news. Take the fire of a Poundland discount store in Chingford that recently made headlines, for example. The blaze devastated the property with both the roof and the floor being completely destroyed in a fire that took over 90 firefighters to control. This is precisely the kind of risk that good quality insurance covers you against, and without it, your investment will be completely exposed.

In the UK, it is the responsibility of the landlord to take out the insurance policy and handle claims for the property; however, it is most often the case that the commercial tenant will be recharged the cost. This means that the tenant must pay for the insurance premium as part of the “Fully Repairing and Insuring” obligation in their lease agreement.

There are many types of commercial building insurance covers, but generally they will cover permanent fixtures (walls, flooring etc), fire damage, vandalism, and storm or flood damage (or other natural causes related damage). However, no two policies are created equal, so when it comes to insurance, it’s best to speak to an expert, like our team here at Prideview, about your needs and what level of cover you want.

The team at Prideview Properties have over 30 years experience specialising in acquiring blue chip property with solid return for our clients. If you’re looking at commercial property investment, or have any questions regarding insurance, contact us today on +44 (0)208 954 0878 and our highly experienced team will be happy to assist.

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