Tenant repair obligations are one of the most misunderstood and most costly aspects of taking on commercial premises in the UK. Before you sign a lease, you need to know who is responsible for what — because the answer is almost never as simple as “the landlord fixes the building and the tenant looks after the inside.”
This checklist breaks down the key cost areas: repairs and maintenance, building insurance, service charges and common area maintenance (CAM) charges. Understanding how these work — and how they are structured differently under the main lease types — can prevent significant unexpected bills during and at the end of your tenancy.
Why tenant repair obligations vary so much between commercial leases
Unlike residential tenancies, where the Landlord and Tenant Act 1985 sets a clear baseline of landlord responsibility, commercial leases are largely a matter of negotiation. The starting point is whatever the lease says — and commercial landlords typically draft leases in their own favour.
The structure of your lease determines the scope of your tenant repair obligations. Two businesses occupying similar premises in the same street can have completely different cost exposures depending on whether they are on a Full Repairing and Insuring (FRI) lease, an Internal Repairing and Insuring (IRI) lease, or a gross lease. Understanding the difference between these structures is the foundation of understanding your costs. Our guide to the different types of commercial leases in the UK explains each structure and what it means in practice for tenants.
Full Repairing and Insuring (FRI) leases: the most demanding tenant obligation
An FRI lease is the most common structure for standalone commercial properties and longer-term lettings in the UK. Under a Full Repairing and Insuring lease, the tenant bears responsibility for maintaining the entire property in good repair throughout the term — including the structure, exterior, roof, and all internal elements — and also contributes to the cost of the landlord’s buildings insurance.
This is one of the most significant financial risks in commercial property. Tenant repair obligations under an FRI lease can include:
- Structural repairs to walls, floors, and the roof — even if these were defective when you took the property on
- Maintenance and replacement of mechanical and electrical systems, including heating, plumbing, and ventilation
- Upkeep of the exterior — fascia, windows, doors, guttering, and drains
- Any improvements or reinstatement required at the end of the term
- A contribution to the landlord’s buildings insurance, typically charged as “insurance rent”
The critical protection under an FRI lease is a Schedule of Condition — a detailed photographic and written record of the property’s state at the start of the lease, agreed by both parties and attached to the agreement. Without one, your tenant repair obligations may extend to putting right defects that existed before you moved in. With one, your liability is capped at returning the property to the condition documented at the outset.
At the end of an FRI lease, landlords often serve a dilapidations claim for any disrepair they say falls within your obligations. These claims can run to tens of thousands of pounds and are one of the most common areas of commercial lease dispute.
Internal Repairing and Insuring (IRI) leases: a more limited repairing exposure
An IRI lease limits the tenant’s repair obligations to the interior of the demised premises — the space you actually occupy. The landlord retains responsibility for the structure, the exterior, the roof, and any common parts of the building.
IRI leases are most common in multi-tenancy buildings: office blocks, retail centres, and industrial estates where the landlord is managing a building occupied by several different tenants. The practical advantage for tenants is a clearer boundary between your obligations and the landlord’s. The cost catch is that the landlord will typically recover the cost of structural and external maintenance through a service charge — and those charges can be substantial and unpredictable.
Tenant repair obligations under an IRI lease typically include:
- Maintenance and redecoration of the internal walls, ceilings, and floors
- Upkeep of all fixtures and fittings within the demised area
- Compliance with the lease’s decoration covenants — usually requiring internal redecoration every three to five years and in the final year of the term
- Responsibility for any damage caused by the tenant or their staff, contractors, or visitors
Service charges and common area maintenance (CAM) costs: what tenants often overlook
Service charges — sometimes referred to as common area maintenance or CAM charges — are the mechanism by which landlords recover the cost of managing, maintaining, and insuring the shared parts of a multi-tenancy building. They are a standard feature of service charges in a commercial lease and can be one of the least predictable costs a tenant faces.
What the service charges commercial lease provisions can include:
- Cleaning and maintenance of shared areas: stairwells, lobbies, lifts, car parks, and corridors
- Landscaping and upkeep of external grounds and shared outdoor areas
- Buildings insurance for the whole structure, pro-rated across all tenants
- Repair and replacement of shared mechanical and electrical systems
- Security and concierge costs where provided
- Management fees charged by the managing agent or landlord for administering the building
- Contributions to a sinking or reserve fund for major capital works such as roof replacement or lift refurbishment
Service charges can vary considerably from year to year, particularly in older buildings where major works are due. Tenants should examine the service charge provisions carefully before signing. Key issues to look for include whether there is a cap on annual increases, whether the tenant has audit rights to inspect the supporting accounts, and whether there is any mechanism to challenge expenditure that seems unreasonable. The government’s guidance on leasehold service charges and tenant rights sets out the statutory framework that applies to residential leaseholders and is a useful reference point for understanding the principles — though commercial leases operate under different rules.
Understanding the full scope of service charge obligations is one of the areas covered in our detailed breakdown of the commercial lease terms every tenant must understand before signing.
About to sign a commercial lease without checking your repair liability?
Tenant repair obligations under FRI and service charge provisions can expose you to structural repairs, insurance contributions and end-of-lease dilapidations claims that were never part of your original budget. Speak to a commercial lease solicitor before you commit so you understand exactly what costs you are taking on.
Insurance: what the landlord covers and what you must arrange yourself
Insurance in a commercial lease is not a single item — it is split between the landlord’s obligations and the tenant’s, and both matter.
What the landlord insures
In most FRI leases, the landlord is responsible for insuring the building structure. The cost of this buildings insurance is then recharged to the tenant as “insurance rent” — a separate line item in addition to the headline rent. Under an IRI lease, the landlord similarly insures the whole building and recoups the cost through the service charge.
The buildings insurance covers the structure and fabric of the property. It does not cover your contents, your business equipment, your stock, or your liability to third parties.
What the tenant is responsible for
As a commercial tenant, you will almost always be required under your lease to maintain at minimum:
- Contents insurance — covering your business equipment, furniture, stock, and any fixtures or fittings that belong to you
- Public liability insurance — covering claims arising from injury or property damage suffered by third parties on your premises
- Employers’ liability insurance — a legal requirement if you employ anyone, including part-time and temporary staff
Some leases specify minimum levels of cover — check the insurance provisions carefully. Failing to maintain the required cover can constitute a breach of the lease, potentially triggering the landlord’s right to forfeit the agreement and recover possession.
The 18-month rule: a critical protection for tenants on service charges
One important legal protection worth understanding is the 18-month rule. Under section 20B of the Landlord and Tenant Act 1985, a landlord must issue a demand for service charges within 18 months of incurring the relevant costs. If they fail to do so — and have not served a notice within that period informing you that costs have been incurred — they lose the right to recover those costs from you.
This rule provides a meaningful protection against landlords recovering historic expenditure years after the fact. However, it only applies if you know about it and are prepared to rely on it. Always keep records of when service charge demands are issued and ensure your solicitor checks the timing carefully, particularly if a large or unexpected demand arrives.
Dilapidations: tenant repair obligations at the end of the lease
Dilapidations are the landlord’s claims against a tenant for breach of the repairing and decorating covenants in the lease at the end of the term. For tenants on FRI leases in particular, a dilapidations claim at lease expiry is one of the most significant financial risks of the whole tenancy.
Landlords will typically commission a schedule of dilapidations from a surveyor shortly before or after the lease ends, setting out every item of alleged disrepair and the estimated cost of putting it right. These claims can be extensive — and the initial figure is often significantly higher than what is ultimately agreed.
Challenging a dilapidations claim effectively requires a clear understanding of what the lease actually requires, supported by a Schedule of Condition if one was prepared at the outset. Tenants who have specialist legal support when responding to dilapidations claims consistently achieve better outcomes than those who engage with the landlord’s surveyor alone. Our landlord and tenant disputes team regularly advises tenants facing dilapidations claims and helps them assess which elements are genuinely owed and which can be challenged.
What to check before you sign: a practical cost review
Understanding tenant repair obligations is far more valuable before you sign than after. Once the lease is executed, the terms are fixed. Before exchange, every item on this list is a negotiating point.
Before committing to a commercial tenancy, verify:
- The scope of your repairing obligation: FRI, IRI, or something else? What exactly falls within your remit?
- Whether a Schedule of Condition will be prepared: if not, insist on one before completing
- The service charge provisions: what is included, is there a cap, and do you have audit rights?
- The insurance obligations: what cover must you maintain and at what level?
- The CAM charge structure: how are common area costs calculated and apportioned between tenants?
- Decoration covenants: how often must you redecorate, and what happens in the final year?
Getting a specialist solicitor to review your lease thoroughly before you sign is the most reliable way to understand the full cost picture before you commit. An experienced commercial lease solicitor will identify obligations that are not obvious from a first read and help you negotiate improvements before exchange.
Get clear legal advice on your tenant obligations before you commit
Tenant repair obligations under a commercial lease can expose businesses to costs that were not part of their original planning. Whether you are weighing up the full implications of an FRI lease, trying to understand a complex service charges commercial lease schedule, or facing a dilapidations claim at the end of your term, specialist legal advice makes a material difference to the outcome.
At Lease Lawyer, we advise commercial tenants across England and Wales at every stage of the leasing process — from reviewing lease terms before exchange to resolving disputes during and after the tenancy. If you want to understand exactly what you are being asked to take on before you sign, get in touch with our team for a clear, practical assessment of your obligations.
Unsure what your tenant repair obligations really include?
Repair clauses, insurance rent and service charge provisions can shift major structural and maintenance costs onto tenants — especially under Full Repairing and Insuring (FRI) leases. Without a Schedule of Condition or clear limits on service charge exposure, businesses can face significant unexpected liabilities during the term and substantial dilapidations claims at lease expiry.
Our commercial lease solicitors review tenant repair obligations before exchange, identify hidden cost risks and help negotiate protections so you understand the full financial commitment before signing.