Associate solicitor Gemma Smith, in our Commercial Property team, explains the regulatory requirements that apply to commercial property.
It has become apparent recently that a number of commercial property owners remain unaware of the regulatory requirements which must be complied with, as set out briefly below.
It is a criminal offence not to have a management asbestos survey in place for commercial (non-domestic) property built prior to 2000. The initial regulations came in to force in 2006 but the most up to date legislation is the Control of Asbestos Regulations 2012 (‘Regulations’). Non-compliance may carry a penalty of a fine of up to £20,000 and imprisonment of up to 12 months.
Once a survey has been carried out, it does not need to be repeated other than as set out below. If no asbestos was found or if all asbestos has been certified removed, then no further action is required but the survey and certificate should be retained as proof of compliance.
If asbestos is found it is also a legal requirement to have an asbestos register which records all asbestos at the property and a management plan. These will need to be updated regularly and at least annually. If these annual inspections have not been carried out, then you may be required to repeat the full management survey as the records relating to the asbestos will be out of date.
If works are planned at the property then a more detailed survey will be required, a refurbishment/demolition asbestos survey. This will look in more detail at whether the asbestos can be worked around and managed or if it will need to be removed.
The legal requirement to comply with the Regulations rests with the ‘duty holder’. This is the person with an obligation to repair and maintain the property and can be more than one person at any one time. Commonly it will be the freeholder, or in the case of a full repairing lease, the tenant.
Unlike with EPCs (see below), there is currently no legal requirement for an asbestos survey to be provided by a seller/landlord to a buyer/tenant prior to a sale or lease even though the survey should exist. We would advise buyers/tenants to insist on an asbestos survey being supplied as they will be taking on these obligations and will want to know what the risk is to their workforce and themselves and whether the presence of asbestos may affect any planned alterations or development works. It will also be the case that a seller or landlord with a commercial property where there is no asbestos survey in place will be committing a criminal offence under the Regulations which may delay the transaction.
Fire risk assessments
It is also a criminal offence not to have a fire risk assessment in place for commercial property. This is governed by The Regulatory Reform (Fire Safety) Order 2005 (‘Order’).
The initial fire risk assessment should be reviewed at regular intervals, the regularity required will be dictated by a number of factors such as any increased risk, number of occupants etc. As the assessment is dependent on occupier, a new assessment will be required if the occupier changes. There are other obligations set out in the Order, including putting in place and maintaining fire safety measures, planning for emergencies and ensuring those using the building are aware of the measures in place.
Each business must have a designated responsible person for the purposes of the Order, so generally these obligations will fall to the occupier whether that be a freeholder or tenant. Where the premises are vacant, compliance will fall to the freeholder.
As is the case with asbestos surveys, there is no legal requirement for a fire risk assessment to be provided by a seller/landlord to a buyer/tenant. We would advise buyers/tenants to insist on a fire risk assessment prior to completion as even though it is specific to user, the lack of one would still mean that a criminal offence is being committed which could cause delays in the transaction.
Energy Performance Certificates
The position relating to Energy Performance Certificates (‘EPCs’) seems to be more widely known in that they are a legal requirement for (most) property transactions and they must be supplied to a potential buyer or tenant. Whether they are required for a lease renewal is a slightly grey area and there are various conflicting opinions.
The Minimum Energy Efficiency Standards (MEES) as set out in the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015 set out further legal requirements relating to the energy performance of a property and subject to certain exemptions it is unlawful to grant a tenancy (even a renewal to an existing tenant) if the property has an EPC rating of F or G. From 1 April 2023 commercial landlords will not be permitted to continue accepting rent from a tenant of a property which is already let if the property has an EPC rating of F or G.
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This article is intended for the use of clients and other interested parties. The information contained in it is believed to be correct at the date of publication, but it is necessarily of a brief and general nature and should not be relied upon as a substitute for specific professional advice.