In the previous instalment of our real statutory compliance blog, we looked at various Health and Safety rules which could put a tenant in breach of a commercial lease. However, there are a number of statutory provisions to do with the building itself which fall to the tenant to observe. A statutory compliance clause will place all planning and building regulations on to the tenant’s shoulders, even if works were carried out before the start of the lease.
PLANNING AND BUILDING CONTROL
The planning rules in Scotland provide that a planning consent will expire after 3 years unless works have been started during that time. Any works requiring a building warrant must be signed off by the local authority.
Where a planning permission is granted, there is no obligation for works to be carried out (although the permission will usually expire after 3 years if development doesn’t start in that time). However, where work is started, any conditions attached to the planning consent must be complied with. Any works requiring a building warrant must be carried out in accordance with the approved drawings, and when works are completed a completion certificate should be submitted to the local authority for acceptance.
Where works have been carried out by the Landlord (including the original construction of the building), the tenant should ensure that all planning conditions have been satisfied before the lease commences, and that the relevant completion certificate is in place.
For any tenant works (including initial fit-out), the local authority should confirm that all conditions attached to the planning permission are satisfied. Once the conditions are satisfied, contractors should not start work until the relevant building warrant has been obtained. On completion of the works, a completion certificate should be submitted to the local authority for acceptance. Otherwise, the local authority may take enforcement action (which may include requiring removal of the works carried out), notwithstanding that a period of time has elapsed since the works were carried out.
Scottish Government Building Standards Procedural Handbook: https://beta.gov.scot/publications/building-standards-procedural-handbook/Procedural%20Handbook%203rd%20Edition%201.5%20(July%202017)%20-%20PUBLISHED%20VERSION.pdf
Although not strictly speaking to do with any construction works, planning legislation also governs what the premises can be used for.
Premises can only lawfully be used for activities within the class or classes specified by the planning legislation.
Tenants will need to ensure that their proposed use falls within the use class allocated to the property under planning legislation. For any change of use, the new use will require landlord’s consent, and will also need to fall within the relevant use class category. However, certain changes of use do not require fresh consent (e.g. restaurant use can be converted to retail). The tenant should check whether a planning application is required for change of use in each case.
Scottish Government Planning Circular on Use Class and permitted Changes of Use: http://www.gov.scot/Publications/1998/01/circular-1-1998-root/circular-1-1998-intro
The Construction (Design and Management) Regulations 2015 impose duties on an employer to make suitable arrangements for any construction works including providing safe access to and from the construction site and suitable security fencing.
In relation to any construction work which is proposed to last longer than 30 days, with more than 20 workers (or which will exceed 500 person days), the works must be notified to the Health and Safety Executive prior to commencement. Where there is more than one contractor, the client must appoint a designer and a principal contractor.
Tenants need to ascertain whether the CONDAM regulations applied to any works carried out before the lease started, in order to obtain the relevant Health & Safety file.
For any tenant works, the tenant should ascertain whether the regulations apply and what the lease specifies (usually the Tenant will be the ‘client’ for the purposes of the regulations but this can sometimes be the Landlord). If required, the Tenant should appoint a designed and contractor with suitable expertise to comply with the regulations. The Tenant will also have to hand over the relevant Health & Safety File to the Landlord at expiry (or to an assignee on any permitted assignation).
Health and Safety Executive: http://www.hse.gov.uk/construction/cdm/2015/index.htm
The statutory compliance clause in a commercial lease can therefore place a large burden on the tenant, as it will include liability for all laws and regulations on the statute books at any given time. Any breaches of statutory rules therefore give the Landlord a foothold to argue that the tenant is also in breach of their lease.
The good news for a tenant is that the Landlord cannot terminate a lease without giving the tenant a reasonable period of time to remedy any breach. In the case of any statutory non-compliance, the Landlord will need to have regard to the nature of works required to remedy the breach, so the Tenant will always have a ‘last chance’ to fix the problem.
If you are concerned whether or not you are complying with the terms of your lease, please don’t hesitate to contact any of the Gilson Gray real estate team.
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