Who Pays for Commercial Lease Repairs? A Guide for Businesses, Landlords and Occupiers

Responsibility for commercial lease repairs depends on the lease and the circumstances of the defect.

The party arranging the work may not be the party that ultimately bears the cost. A commercial landlord may organise a repair and recover eligible expenditure through a service charge, while an occupier business may arrange urgent works that later prove to sit outside its repairing liability.

For facilities and property managers, those are two separate questions:

Who needs to act now?

and

Who is contractually responsible for the cost?

Consider a leaking roof above a trading floor. The immediate priorities may be to protect people, stock and equipment, contain the water and prevent further damage. At the same time, the facilities team may need to establish the cause, preserve evidence and review the lease, service-charge provisions, insurance arrangements and condition records.

Good facilities management coordinates that response and preserves the evidence needed to establish contractual responsibility.

Jurisdiction note: Commercial lease law and dilapidations procedures differ across the UK. This guide draws primarily on principles and procedures used in England and Wales. Businesses with properties in Scotland should confirm the position under Scots law separately.

Start with the lease

A commercial lease sets out which party is responsible for repairing, maintaining, renewing or replacing different parts of the premises.

The contractual obligation will normally sit with the landlord business, the occupier business or both, depending on the relevant part of the property and the wording of the lease.

A managing agent or facilities provider may then manage the work on behalf of one of those parties.

That distinction matters.

Contractual responsibility determines the underlying obligation.

Operational responsibility determines who reports the fault, instructs contractors, approves access, monitors the work and keeps the building functioning.

The two should not be assumed to be the same.

Terms such as “keep in repair” can also impose broader obligations than they first appear to. In some circumstances, an occupier may be required to put an element into repair even where its condition was already poor when the lease began.

A properly prepared schedule of condition can therefore be important when defining the extent of an occupier’s repairing liability.

Who might pay? A decision table

This table identifies where a facilities or property manager should start checking. It does not determine liability on its own.

The key is to establish the cause and contractual route before assuming responsibility based on where the defect happens to appear.

Full repairing and insuring leases

A full repairing and insuring (FRI) lease typically places extensive repairing responsibility on the occupier business.

The landlord will often arrange the building insurance and recover the relevant premium from the occupier, but the exact position depends on the lease wording.

In a single-let property, an occupier’s repairing obligations may extend to the structure, roof, services and external areas.

In a multi-let office, retail or industrial property, occupier responsibility is more commonly limited to the demised premises. The commercial landlord may retain responsibility for structural elements, common areas and central plant, with eligible expenditure recovered through the service charge.

For businesses operating from multiple leased properties, this creates an important practical risk: the same type of repair can sit with different parties at different sites.

A portfolio-wide maintenance process therefore needs to recognise the lease structure at each property rather than applying one assumption everywhere.

The condition at lease commencement matters

Consider a business taking a warehouse with an ageing roof and visible staining to internal finishes.

Six months later, heavy rain exposes more extensive water ingress.

If the lease contains a broad repairing covenant and there is no effective limitation based on the starting condition, the occupier may face an obligation that extends beyond simply preserving the property in the condition in which it was taken.

A schedule of condition records the premises at lease commencement, usually through dated photographs and written observations.

It can help limit an occupier’s repairing exposure where the lease expressly connects the obligation to that recorded condition.

The schedule itself is therefore not enough.

The lease needs to make clear how the schedule of condition limits the repairing obligation.

This is especially relevant for older commercial properties, short leases, premises with visible defects, ageing plant, deferred building-fabric repairs and properties where substantial refurbishment may be needed during the term.

Known problems may also be dealt with through specific exclusions or landlord obligations agreed when the lease is negotiated.

Repair, replacement and improvement

The distinction between repair, replacement and improvement can affect both contractual liability and service-charge recoverability, but the boundary is not always straightforward.

The lease wording, the condition of the asset, the nature of the works, and the reason for carrying them out all matter.

Replacing failed lighting with an available modern equivalent may still form part of a reasonable repair or replacement programme.

Installing a completely new building management system across a multi-let property may raise different questions about improvement, capital expenditure and recoverability.

For facilities teams, the important point is not to let a debate about terminology delay an urgent safety response.

A failed fire-door closer, leaking pipe or unsafe floor still needs to be controlled.

For more substantial works, however, condition evidence, scope, approval and the reason for the intervention should be documented before major expenditure is committed.

Planned maintenance creates useful evidence

Small defects left unresolved can increase repair costs and complicate later disputes.

Loose guttering can develop into water ingress. A recurring air-conditioning alarm can precede plant failure. Minor damage around a loading-bay opening can lead to wider deterioration of the building fabric.

A planned preventative maintenance programme gives facilities teams a clearer record of asset condition, inspection dates, work completed, repeat faults, recommendations, outstanding actions and lifecycle risk.

That information is useful operationally, but it can also become important evidence when responsibility is disputed.

It can help establish whether a defect developed gradually, whether recommended maintenance was deferred, whether an asset had already reached the end of its useful life or whether damage followed a specific event.

For businesses managing multiple leased properties, those records also help identify which sites are accumulating maintenance or lease-end exposure.

A fault inside the unit may not belong to the occupier

Physical location does not always determine responsibility.

An occupier may report an air-conditioning failure inside its premises, but the fault may originate in central plant serving several units.

Similarly, water appearing through an internal ceiling may originate from landlord-controlled roof fabric or common pipework elsewhere in the building.

The facilities team should therefore establish the cause before allocating responsibility.

That may require reading the lease alongside the demise plan, service-charge provisions, plant schedules, maintenance records and information about which systems serve which parts of the property.

This is one reason effective diagnosis matters commercially as well as technically.

Service charges: who arranges the work is not necessarily who pays

In multi-let commercial properties, the landlord may arrange repairs, maintenance and services across common areas and shared infrastructure.

That does not mean every cost can automatically be passed to occupier businesses.

Recoverability depends on the lease.

The service-charge provisions should set out which services and works are recoverable, exclusions, agreed expenditure caps, methods of apportionment, management charges, and the treatment of significant repair or replacement works.

This is the central distinction:

The party responsible for arranging the repair and the party ultimately responsible for paying for it may be different.

For occupier businesses, clear supporting information helps facilities, property and finance teams understand significant service-charge expenditure.

For commercial landlords and managing agents, good records help demonstrate why works were required, how costs were allocated and how decisions were made.

The RICS professional standard, Service charges in commercial property, 2nd edition was published in June 2025 and became effective on 31 December 2025. It promotes best practice, consistency, fairness and transparency in commercial service-charge management.

Dilapidations and lease-end liability

Dilapidations concern breaches of lease obligations relating to matters such as repair, reinstatement and decoration during or at the end of a commercial lease.

For corporate occupiers, they can create significant financial exposure where maintenance has been deferred, alterations have not been reinstated or repairing obligations have not been addressed.

A landlord may issue a schedule setting out alleged breaches and proposed remedial works.

That schedule does not automatically determine the amount that can ultimately be recovered.

In England and Wales, section 18(1) of the Landlord and Tenant Act 1927 limits damages for breach of certain repairing covenants by reference to the reduction in the value of the landlord’s reversion caused by the disrepair. It can also prevent recovery where demolition or structural alteration would render the repairs valueless.

The Dilapidations Protocol for England and Wales also requires a quantified demand to reflect the landlord’s likely loss rather than automatically equating that loss with the cost of every proposed repair. It also addresses works likely to be superseded by the landlord’s intentions.

This is an area where specialist surveying and legal advice becomes particularly important.

An occupier business approaching lease expiry should therefore assess the premises well before the final months of occupation.

Early review gives facilities, property, finance and legal teams more time to identify potential liabilities, investigate disputed items, plan works around operations, obtain approvals, assess reinstatement obligations and decide where specialist advice is needed.

Commercial landlords and property companies benefit from the same early visibility when assessing an asset’s future condition and use.

What to do when a significant defect occurs

The following are priorities, not a rigid sequence. Depending on the issue, several may need to happen at the same time.

1. Make the situation safe

Protect people, stock, equipment and operations.

For a significant water leak, that may include isolating the source, protecting affected areas, introducing temporary containment and checking nearby electrical systems.

2. Preserve the evidence

Record the condition before information is lost.

Useful evidence can include:

• photographs;
• affected areas;
• the time the issue was reported;
• temporary actions taken;
• contractor attendance;
• previous fault history; and
• operational impact.

3. Establish the cause

Do not allocate cost simply because the defect first appeared within one party’s space.

A competent contractor or surveyor may need to establish whether the cause relates to occupier equipment, landlord fabric, common services, accidental damage, an insured event or underlying asset failure.

4. Check the contractual and property records

Review the relevant:

• lease;
• demise plan;
• repairing covenant;
• service-charge provisions;
• insurance arrangements;
• schedule of condition; and
• maintenance records.

Notification requirements and approvals may also need to be dealt with while diagnosis is ongoing.

5. Agree the repair route

Confirm the work required, expected timescale, access arrangements, approvals, operational restrictions and who has authority to instruct the permanent repair.

Where responsibility for the cost cannot be agreed immediately, necessary safety or damage-limitation works may still need to proceed while the parties preserve their contractual positions.

Precision FM’s Hard FM services support the physical maintenance side of commercial estates, including planned building-fabric maintenance and reactive repair activity.

Multi-site coordination for business portfolios

Lease repair management becomes harder when an organisation occupies, owns or manages multiple commercial properties.

Different sites may have different landlords, occupiers, repairing covenants, service-charge structures, schedules of condition, maintenance providers and approval processes.

A coordinated facilities management approach can create a common operational process for logging defects, gathering evidence, instructing contractors and monitoring repair activity across the estate.

A managed CAFM system can support that process by creating more consistent maintenance histories and visibility of planned and reactive work.

Precision’s work with Staffline across a multi-site estate also demonstrates how planned and reactive maintenance, compliance activity and supplier coordination can be brought into a more consistent operational structure.

For corporate occupiers, this helps facilities and property teams identify recurring asset issues and maintain more consistent maintenance histories.

For commercial landlords, property companies and managing agents, it can improve visibility of open repairs and contractor activity across managed assets.

Need a clearer way to manage repairs across multiple commercial sites?

Precision FM helps businesses coordinate planned and reactive maintenance, contractor activity and repair reporting across commercial estates.

If repair responsibilities, site approvals or maintenance records are becoming difficult to manage across multiple properties, speak to our team about creating a more consistent operational approach.

Talk to Precision FM

When to seek specialist advice

Facilities management can help diagnose physical problems, coordinate contractors, manage urgent works and preserve the records needed to support later decisions.

It should not replace legal interpretation of a commercial lease.

A property solicitor or other suitably qualified adviser should be involved where responsibility turns on disputed lease wording, material service-charge recovery, dilapidations, reinstatement obligations or significant financial exposure.

A chartered building surveyor or other appropriate technical specialist may also be needed where there are structural concerns, major plant failures, significant water ingress, disputed building condition, insurance-related damage or dilapidations issues.

The right time to obtain specialist advice is before a major commitment is made, not after substantial works have changed the building or the available evidence.

A practical closing test

When the next significant repair is reported across your commercial estate, can your facilities or property team answer five questions?

• What needs to be made safe now?
• What caused the defect?
• Which lease provision is relevant to responsibility?
• What evidence shows the previous condition and maintenance history?
• Who has authority to instruct the permanent repair, and who may ultimately bear the cost?

If those answers are unclear, resolving responsibility is likely to take longer.

Good facilities management cannot rewrite a commercial lease.

It can, however, protect the building, preserve the evidence and make sure the right decision reaches the right person quickly.