The Importance of Commercial Property Surveys

Surveys are just as important for commercial premises as they are for domestic properties. If you are a business owner you do not want to be landed with a hefty repair bill to correct a problem which could eat into your profits, any more than a homeowner does.

Anderson Associates is an experienced firm of building surveyors based in Suffolk, who undertakes commercial work in Kent, Essex, and south and east London, as well as our home county.

Here we look at some of the key differences between surveys for commercial and domestic properties, and how we offer a comprehensive service for both landlords and tenants.

Differences from Domestic Properties

You and your business may be on-site on a lease for a fixed period of time - unlike a home where you’re likely to be there for much longer. You may simply be occupying one part of a much larger building, rather than the entire property – like someone renting out a flat in a bigger block. You may even have to convert your premises – or part of the premises – to make it suitable for a specific business use.

Commercial property surveys are often more thorough than domestic surveys because of the specific safety requirements they must adhere to; there is a lot more legislation to comply with in the commercial sector than in the domestic.

Schedule of Condition and Dilapidations

These are further differences which don’t usually apply to domestic properties, particularly those which are not being rented out. Dilapidations are the disrepair, damages or defects which the tenant is legally responsible for putting right under the terms of the lease.

It is therefore essential to have lease terms drawn up, so all parties know where they stand.

Anderson Associates can act on behalf of either landlord or tenant to work out what repairs are needed, and who is responsible for paying what.

A Schedule of Condition is normally done prior to a tenant moving into the premises and will provide a record of the state of every part of the building within the lease demise.

At the end of the lease it also provides a record of the condition the tenant received the property in, allowing a comparison to be made prior to and after the tenant vacates the premises to see the property hasn’t deteriorated over the course of the lease.

The Schedule of Condition also means that the tenant isn’t necessarily liable for the poor condition of any deteriorated parts of the property, such as the walls and windows, if it can be shown that they were in a poor state before they moved in.

Any work undertaken by the tenant over and above the lease terms may be classed as an enhancement that the landlord may derive a future benefit from and would be therefore liable to give a consideration to the outgoing tenant for this.

Agreeing a Schedule of Condition has advantages for both landlords and tenants because it avoids potentially lengthy and costly legal arguments.

What Type of Survey?

Anderson Associates offers a range of commercial property surveys. Dependant on circumstances, we may recommend a Condition Survey, or Pre-Acquisition Survey or a full building/structural survey, as a valuation provided by an ordinary commercial mortgage will not provide a comprehensive picture of the whole of the building.

A full survey will cover every part of the premises and, where access allows, areas which you may not be directly occupying. Anderson Associates will be able to tell you if another part of the premises is in a poor condition and, subject to legal confirmation, if you will be in any way liable for any repairs.

In most instances we would advise a full Pre-Acquisition/Condition Survey is undertaken, which normally includes the following:

1. A schedule of photographs (on a CD) to provide an illustration of both specific defects and the general condition of the accommodation as necessary.
2. A brief cost summary of works considered necessary to bring the premises up to what would be considered an acceptable condition.
3. Further comments on the specific lease sections relating to maintenance and repairs.

This type of report has both short and longer term benefits.

1. It will provide you with an indication as to the overall condition of the property which, in conjunction with the specific lease clauses, will allow you to determine what repairs are landlord or tenant responsibilities.

If these liabilities are taken on by you on occupation, it may allow you to extend the rent-free period to cover the cost of you undertaking the works in lieu of the landlord.

2. At the end of the lease term, prior to vacating the premises, the landlord will serve a Terminal Schedule of Dilapidations. This will list works deemed to be your responsibility. The schedule prepared prior to your occupancy will also allow you to make comparisons with the condition of the property at occupation compared to its condition on vacating. This may allow you to contest or negotiate repair costs, potentially saving you considerable expense.

If you are running a business from your premises, it is essential you do not get hit with any unnecessary costs which could threaten your business’s liability.

How Anderson Associates Can Help

Anderson Associates are completely independent chartered building surveyors and can therefore give impartial advice. We act directly for the client and not for a lender, so there is never any conflict of interest.

Paul Anderson (MRICS MCIOB) is an experienced building surveyor and is a Member of the Royal Institute of Chartered Surveyors (RICS) and a Member of the Chartered Institute of Builders (MCIOB) and has more than three decades of experience in the sector, including party wall disputes, building maintenance planning and domestic properties.

If you would like to know more about what services Anderson Associates can offer you, please click here.