Commercial Lease Repair Obligations UK: Full Guide

What this document is

A repair obligation is a covenant in a commercial lease that requires one or both parties to keep the premises in a defined state of repair during the term. In the UK commercial market, the most common arrangement is a 'full repairing and insuring' lease, usually shortened to FRI.

Under an FRI lease, the tenant takes on almost all responsibility for maintaining the property and reimbursing the landlord for buildings insurance, leaving the landlord with a largely passive investment. Where a building is let to multiple tenants, the landlord often retains responsibility for the structure, exterior and common parts, then recovers the cost through a service charge.

The precise wording matters enormously. Words like 'repair', 'maintain', 'renew', 'keep in good condition' and 'put into repair' all mean different things in law, and a tenant who agrees to 'put and keep' a property in repair may be signing up to improve a building that was already in poor condition when they moved in.

The schedule of condition attached to the lease, if there is one, can make a significant difference to what is owed at the end of the term.

How to use this document

1. Read the repair covenant word by word. Do not skim it. Identify exactly what the tenant is obliged to repair, what the landlord retains, and whether the obligation extends to the structure, the exterior, plant and machinery, or only the interior. The difference between 'keep in repair' and 'put and keep in repair' can be thousands of pounds at lease end. 2. Check whether a schedule of condition is attached. A photographic schedule of condition, properly incorporated into the lease, limits the tenant's repair obligation so they do not have to return the property in better condition than they took it. Tenants taking on older buildings should insist on one. Landlords should decide early whether they are willing to accept it. 3. Understand the service charge position. In multi-let buildings, the landlord typically repairs the structure, roof and common parts and recovers the cost through a service charge. Look at what is recoverable, whether there is a cap, and whether items like improvements or sinking fund contributions are included. These can quietly add up year on year. 4. Consider statutory and regulatory overlay. Repair obligations do not exist in isolation. Fire safety, asbestos management, electrical safety, minimum energy efficiency standards and health and safety duties all interact with who is responsible for what. A lease can allocate cost, but it cannot always shift the underlying statutory duty away from the person in control of the premises. 5. Plan for the end of the term. Landlords usually serve a schedule of dilapidations setting out alleged breaches of the repair covenant and the cost of putting them right. Tenants who plan ahead, get their own survey, and negotiate early tend to settle for considerably less than the opening figure. Leaving it until the final week is almost always expensive.

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