REALWorld Law

Commercial leases

Communal costs

Who pays for the maintenance and repair of areas used by several lessees, for example car parks and gardens?

Angola

Angola

Except if otherwise agreed, the lessor is responsible for the repair and maintenance of the common parts of the building in which the property is located.

Australia

Australia

It is standard practice in commercial leases for the landlord to be liable for the maintenance and repair of areas used by multiple occupiers. The landlord's liability is usually an express provision in the lease requiring it to carry out repairs in the building and maintain and repair the common areas of the building.

It is common for the landlord to be reimbursed for such expenses by charging tenants for outgoings. The percentage of outgoings payable by a tenant will consist of an amount based on the size of their leased premises in relation to the entire building's gross rentable space. 

Belgium

Belgium

Most lease contracts contain a provision providing that all costs and rental charges, including taxes relating to the leased premises, are to be covered by the tenant. These costs generally include the maintenance and repair of common areas used by all tenants. The tenant will pay a percentage of these costs in proportion to the size of their premises.

Under the Walloon pop-up lease Decree, it is expressly mentioned that charges are considered to be included in the rent, unless agree otherwise. Such a provision is not included in the Flemish pop-up lease Decree nor in the Brussels Capital pop-up lease Ordinance, in which case the provisions of the Civil Code apply allowing for the allocation of charges to the tenant at their actual cost, unless agreed otherwise.

Bosnia-Herzegovina

Bosnia-Herzegovina

The landlord pays for general maintenance and the cost of insuring the building.

Canada

Canada

The lease’s terms will dictate tenants’ liability for the property’s maintenance. Generally, tenants in multi-tenanted properties will be proportionally responsible for all costs and fees associated with the operation, repair and maintenance of the common areas. Leases may also require tenants to pay a separate fee for parking facilities.

China

China

These costs are usually included in the management fees and are paid by the lessee.

Croatia

Croatia

In the case of a multi-let development, the landlord will repair and maintain the common areas and the structure of the building. Each tenant is usually required to pay a proportion of the service costs, calculated on the basis of the size of their unit.

Czech Republic

Czech Republic

This is decided by agreement between the parties. Each lessee is normally required to pay a proportion of these costs, calculated according to the size of the unit held.

Denmark

Denmark

The lessor is obliged to repair and maintain areas used by multiple occupiers and therefore maintenance of these areas is usually carried out by the lessor; however, the parties are free to agree otherwise including as to who pays the costs.

France

France

If there is more than one tenant the expenses are shared according to the terms of the relevant leases.

Typically, the expenses are allocated on a prorate basis determined with regards of the aggregate surface of the building and the rented surface by each tenant.

Germany

Germany

In most cases this depends on the contractual agreement between the parties. According to recent case law, the tenant is only obliged to contribute towards the cost of maintenance and repair of common facilities if the relevant provision in the lease agreement contains a cap of not more than approximately 8-10% of the annual net rent per annum. In such cases, the landlord usually carries out any maintenance or repairs then reclaims the costs from the tenants.

Hong Kong, SAR

Hong Kong, SAR

The costs for the maintenance and repair of communal areas are covered in the management charges that are payable by the lessee. The management charges are usually calculated based on the size of the premises they occupy in relation to the rentable space of the entire building or estate.

Hungary

Hungary

The landlord is obliged to maintain the common areas, repair defects in the structure and the interior of the building, in particular those relating to gas, water and electricity supplies, which might be dangerous, and to maintain the central appliances in the building. The landlord may also be obliged (as far as legally, economically and technically possible) to make beneficial improvements, such as the installation of appropriate waste disposal systems, sanitary appliances, lifts and sound insulation. The cost of such maintenance and repair is usually recovered from the tenants by means of service charges.

Ireland

Ireland

The tenant, through the service charge.

Italy

Italy

Generally, the landlord is obliged to ensure that the premises remain fit for their normal and agreed use. In a building with multiple tenants, the landlord is responsible for repairing and maintaining the common areas and the structure. Each tenant is responsible for the maintenance of the interior of its individual unit, excluding structural and external repairs.

Expenses for any common services provided by the landlord are paid by tenants in proportion to the size of their units relative to the total rentable area of the property.

Japan

Japan

The lessor pays for the maintenance and repair of common areas used by several lessees.  The amount of such charges is usually included in the charged rent or billed separately to the lessees as communal or management fees based on the areas maintained.

Netherlands

Netherlands

Dutch law obliges the lessee to undertake minor maintenance and day-to-day repairs. The lessor is obliged to carry out any necessary major maintenance or enhancement and major repairs. The parties may agree contractually on a different arrangement. Usually all lessees using the communal areas, such as car parks and gardens, pay the lessor a pro rata contribution (as part of the service charges) for the maintenance and repair of the communal areas.

Nigeria

Nigeria

The payments for the costs of maintenance and repairs of common areas in a property comprising several apartment or office units occupied by numerous lessees are shared as service charges and maintenance costs by the lessees and paid to the lessor or its facility management company responsible for overseeing the maintenance and repair of the areas used in common.

In regulated developments, the lessor or its appointed facilities manager may provide services such as security, alternative power supply, cleaning, utility services, refuse and sewerage disposal and other ancillary services to the lessees of the development who are required to pay a service charge along with the rent.

The parties may negotiate the mode of payment for service charge and the time frame that is different from the agreed rent payment periods.

Norway

Norway

It is normally the landlord's responsibility to pay the cost of all external building maintenance. The landlord must also pay for the replacement of any technical facilities, such as lifts, ventilation systems, fire safety measures, heating systems etc, when it is no longer economically viable to repair them.

At the start of each calendar year the tenant will normally pay a share of the communal expenses, according to a budget prepared by the landlord, in the form of a sum on account. Communal expenses are usually divided according to a set formula applied to the whole building. Payment of any shares allocated to unoccupied rentable parts of the buildings will normally be made by the landlord. The scope of the expenses that the landlord passes on to tenants as communal expenses, and those that are included in the rent, can vary. Communal expenses may also be capped, particularly if the space being let is not in a new building.

Poland

Poland

The landlord must repair and maintain common areas and the structure of the building. Each tenant is usually required to pay a proportion of the costs incurred by the landlord in relation to the maintenance and repair of common areas. The proportion payable is based on the size of the unit leased by the tenant. Certain expenses are normally excluded from the service charge. These include the initial development of the building or repairs to the structure itself, although in leases of commercial property there are fewer exclusions from the service charge.

Portugal

Portugal

The landlord is responsible for the repair and maintenance of the common parts of the building in which the property is located, except if otherwise agreed in the leasing contract.

Romania

Romania

The tenants will usually bear the costs of maintenance and repair of the common areas (eg gardens, car parks, stairways and elevators), in proportion to the surface area of the premises occupied by each tenant, as compared to the total area of the property. These communal expenses are usually divided according to a set formula applicable to the building.

Slovak Republic

Slovak Republic

Generally, the landlord covers the operating costs of the whole building (common expenses) and the tenant pays a proportion of these costs, calculated according to the size of the leased premises.

Spain

Spain

This depends on the contractual agreement, but service charges are generally passed on to the tenants pro rata.

Sweden

Sweden

The landlord pays for the maintenance and repair of areas used by multiple occupiers. However, there are cases where, by agreement, the landlord charges the tenants a proportion of common expenses based on the size of their premises in relation to the total rentable area of the property.

Thailand

Thailand

This arrangement depends on the type of lease and negotiated terms. For example, for a condominium unit, an owner is required to pay a common fee for the use of common property. However, this burden can be shifted to the lessee by way of contract.

United Arab Emirates - Abu Dhabi

United Arab Emirates - Abu Dhabi

Within Abu Dhabi and outside the Abu Dhabi Global Market free zone

The parties to a lease are free to agree who is responsible for the payment of utilities and telecommunications for a leased property. It is common for leased properties to be individually metered and for tenants to pay the consumption charges directly to a provider.

Many neighbourhoods in investment areas in Abu Dhabi are ‘master communities’ where property owners are obliged to pay a community service charge for the maintenance of the community. Again, it is up to the parties to a lease as to how this is dealt with. For example, a landlord may include its liability to community charges in its service charge or a landlord may charge separately for this. It is important for a tenant to have some practical recourse to a landlord in the event that the landlord fails to pay the community charge as ‘master developers’ in Abu Dhabi may take strong action when dealing with non-payment such as blocking access cards or preventing access to communal facilities such as car parking or swimming pools.

Within the Abu Dhabi Global Market free zone

In the Abu Dhabi Global Market free zone, there are no regulations governing maintenance obligations between landlords and tenants, which means the parties are free to contract as they wish. However, the ADGM Strata Title Regulations 2015 provide for unit owners to pay such maintenance costs.

United Arab Emirates - Dubai

United Arab Emirates - Dubai

Usually the lease will include an obligation on the tenant to pay a service charge to the landlord which should be used for such maintenance and repair costs.

UK - England and Wales UK - England and Wales

UK - England and Wales

Except in the case of very simple developments, a service charge will normally be established and each tenant will pay a share of this based on the size of the premises they occupy in relation to the rentable space in the entire building or estate. In the retail sector, it is common for service charges to be weighted to reflect the costs involved in servicing different sized units, or to provide discounts to important tenants. Normally, certain expenses will be excluded from the service charge, such as the initial development costs of the building.

The service charge may be capped, particularly if the space being let is not in a new building.

UK - Scotland

UK - Scotland

The tenant is almost always liable for common expenses. In larger multi-let developments a service charge is normally established to cover common expenses. Each tenant then pays a proportion of the service charge, according to the size of their unit in relation to the total rentable area of the property.

Ukraine

Ukraine

As a rule, such expenses are met by the lessor, but the parties to the lease agreement can agree otherwise.

United States

United States

Leases of premises within multi-tenanted properties generally provide an operating expense clause detailing a mechanism for the tenants to proportionately share the cost of maintaining and operating the common facilities. Some leases (called “full-service gross” leases) require tenants only to pay increases above those operating expenses that the landlord incurred in a set ‘Base Year’.

Zimbabwe

Zimbabwe

The parties are free to contract as they wish in this regard, but typically, the landlord is responsible for the maintenance and repair of the roof, the structure, exterior and all common areas of the leased premises. Where the gardens form part of the leased premises only, for example in a garden flat, the lessee is normally responsible for maintaining it. However, the common grounds and garden areas are normally maintained by the lessor.

Ordinarily, where there are several lessees, a levy is chargeable per month over and above the monthly rental. This levy then goes towards the maintenance, repairs and safety of the complex.