Landlords: Why Repair Clauses Matter in Commercial Leases

For commercial landlords, a carefully drafted repair clause is a fundamental tool for preserving the capital value of your property. It clearly defines the tenant’s responsibility for maintenance, repairs, and end of lease reinstatement, protecting you from unexpected costs and ensuring the property is returned in lettable condition. 

This article from Consultant Solicitor Katie Burgess discusses repair clauses and what commercial landlords should know before they draft one.

Are you a commercial tenant? Click below for what tenants need to know about repair clauses:

Understanding the Language of Repair 

The wording used in leases is legally significant and can determine what repairs you and your tenant are responsible for. Some common phrases include: 

• “To put into good repair” obliges the tenant to bring the property up to a good standard, regardless of its condition at the start of the lease. 
• “To keep in good repair” requires the tenant to maintain that standard throughout the lease. 
• “Good and substantial repair” imposes a higher standard, potentially including structural or fabric upgrades. 

These distinctions directly affect the scope of your recovery if a property falls into disrepair. 

Why Consider a Schedule of Condition? 

While landlords usually aim for the widest possible repairing obligation, there are circumstances where accepting a schedule of condition can be a strategic and commercially sensible decision. 

A schedule of condition is a detailed record (usually with photographs) of the property’s state at the start of the lease. It limits the tenant’s duty to repair the property only to the condition evidenced in the schedule. 

Reasons to Have a Schedule of Condition: 

• Attracting or retaining tenants: Particularly for secondary or older units and properties, offering a schedule of condition can make terms more attractive to tenants, leading to quicker lettings. 
• Fairness and enforceability: When properly prepared and referenced in the lease, a schedule of condition reduces ambiguity, improving enforceability of the repair covenant. 
• Reducing disputes and legal costs: Clear documentation of the condition at the start of the lease provides a reliable reference point. This reduces the scope for argument over liability during or at the end of the term, minimising legal costs and time spent on dilapidations negotiations. 
• Shorter terms or smaller units: For short leases or small premises, this approach may provide protection without overcomplicating the lease structure. 

Common Pitfalls for Commercial Landlords to Avoid 

Not all repair clauses always achieve their intended effects. Issues like ambiguity, contradictions, or failure to integrate with other lease provisions can weaken your position as a landlord. Some common pitfalls include: 

• Inconsistent use of terminology without clarifying what you mean, for example mixing terms like “keep in repair” and “put into repair.” 
• Poorly defined repair boundaries in buildings with multiple occupants/tenants. 
• Neglecting to require tenant reinstatement of alterations at the end of the lease. 

Seeking legal advice at the drafting stage ensures that your repair clauses are watertight and tailored to your property, to reduce the chance of encountering any issues during the lease. 

Protecting Long Term Value 

Even where a schedule of condition is used, it’s vital that: 

• The lease clearly limits repair to the condition recorded.
• The schedule is professionally prepared and incorporated by reference. 
• The rest of the lease aligns with and reinforces the intended scope of liability.

When used wisely, repair clauses can protect your investment as a commercial landlord. In the right context, a schedule of condition isn’t a concession, it’s a cost-effective tool to reduce risk, enhance marketability, and avoid future disputes. 

Get in touch with Katie Burgess for assistance in drafting and reviewing your commercial leases.