Landlord’s objective:

• to make sure that the Property is maintained to an acceptable standard, at the tenant’s expense, so it can be re-let without significant work or expenditure by the landlord.

Tenant’s objective:

• to limit liability to repair to what is reasonable given the age and condition of the Property and the length of the lease; and
• to avoid liability for carrying out work that arises because of a defect in the Property or which is covered by the landlord’s insurance.

Basic repairing covenant

The normal position in a commercial lease is for the tenant to be responsible for repairing the parts of the property let to it, except where damage is caused by an insured risk (see Insurance for more detail on this and the position in relation to uninsured loss). The definition of the Property will govern exactly what the tenant is obliged to repair, so it is vital that this is clear, especially where the lease relates to part of a larger building. The landlord’s repairing obligation should cover the parts not let to the tenant. If the lease is badly drafted and there are parts of the building that neither party is obliged to repair, the court will be reluctant to fill the gap by implying the missing obligations (Jacey Property Co Ltd v de Sousa [2003] EWCA Civ 510)

Repair generally means restoring the Property by renewing or replacing subsidiary parts of it (Lurcott v Wakely [1911] 1 K.B. 905). Work that would involve renewing the whole of the Property or giving back to the landlord something wholly different from the Property originally let will generally not fall within a repairing obligation, although this can be a question of degree (see Inherent defects).

A typical repairing covenant will read:

“To keep the Property in good and substantial repair”. Words like “good and substantial” or “good and tenantable” do not add anything to the basic obligation to repair (Proudfoot v Hart (1890) 25 Q.B.D. 42). The tenant must keep the Property in the state of repair that a reasonably minded tenant likely to take a lease of the Property would expect. The required standard of repair will be judged by reference to the age, character and nature of the Property at the date of the lease.

Good condition

It is increasingly common to see a covenant that reads: “To keep the Property in good and substantial repair and condition”. The reference to condition adds to the basic repairing obligation and may mean the tenant has to carry out works that go beyond mere repair. For example, a property suffering from damp and condensation because of poor ventilation would not comply with a covenant to keep it in “good condition and repair” and the tenant might be obliged to improve the ventilation. This would not be the case without the reference to “condition” (Welsh v Greenwich London Borough Council [2000] 3 EGLR 41).

Inherent defects

The Property may suffer from defects caused by faulty design or construction (often referred to as inherent defects). If the lease does not set out expressly who is liable to remedy inherent defects, the general rule is that the tenant will not be obliged to deal with them unless they have caused disrepair. In practice, this means that the Property must be in a worse condition than it previously was (Quick v Taff-Ely Borough Council [1985] 3 All ER 321). If the Property is defective (for example, the basement floods regularly) but has not suffered any actual deterioration, the repairing obligation will not bite (Post Office v Aquarius [1987] 1 All ER 1055). If a defect has caused disrepair, the tenant’s repairing obligation may extend to remedying the defect as well, depending on the extent of the work that would be required (Ravenseft Properties Ltd v Davstone (Holdings) Ltd [1979] 1 All ER 929; Stent v Monmouth D.C. [1987] 1 EGLR 59).

Schedules of condition

If the tenant’s repairing obligation is to be limited to keeping the Property in no worse a state than it is at the date of the lease, it is vital to include a comprehensive schedule of condition in the lease. This should be prepared by a surveyor and agreed by the parties. It must describe in detail the precise condition of the Property at the date of the lease and should include photographs.