You may be interested in the article below written by Simon Korn for the London Office Guide.
Since the dark days of the recession, landlords are now actively seeking ways to enhance the value of their buildings. This is clearly an easy task when they have an empty building to refurbish, however problems arise when the buildings are part or fully let. This has now resulted in the anomaly where the landlord refurbishes the building and seeks reimbursement for the cost of those works from the tenant.
Often works are carried out without pursuing the relevant lease clauses by either party and this can result in the inequity of tenants paying for work which are clearly not their responsibility.
It is normally open to a landlord to improve the value of the building at his own expense, but if the improvements are funded by the tenant, the impact of improvements can be further felt at lease renewal/review and this would be a particularly sore point with the tenant if they had in fact funded the improvements for which they were being asked to pay additional rental when indeed there was no covenant in their lease for this.
The standard commercial lease would have convents for the landlord to maintain/repair the building and to charge back the costs of this by way of quarterly advance service charge which is adjusted at the year end when the full figures are known or indeed spread the payments over a period of time to ease the burden on the tenant. There are, however, many pitfalls here to the unwary. Landlords may tend to charge items for which there is no provision in the lease, or in extreme circumstances, when the building has been neglected by the landlord, for the cost of putting right the landlords neglect.
It is essential that tenants be made aware of their rights and through investigation of their lease, ascertain whether they are indeed responsible for the landlord’s refurbishment.
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