#257 How to meet legislative and ISO requirements in leasehold properties

Many businesses do not own the property they operate in, this can lead to complex questions over who has ownership over certain property and facility related legal obligations.

Managing areas such as waste transfer, electrical, gas and aircon servicing etc could feasibly be managed by both landlords and those leasing the property, and it's important to establish who manages what to ensure all legal requirements are met.

In this episode, Ian Battersby discusses the complexities of leasehold compliance, including how to establish key responsibilities, examples of what legal and ISO related requirements need to be met and what evidence you need to be keeping a record of.

You'll learn

· What is leasehold compliance?

· What areas do you need to consider within leasehold compliance?

· Establishing responsibility

· What subject areas relate to ISO compliance?

· How to plan for leasehold compliance and gathering evidence

Resources

· Isologyhub

· PAS 79

· BS 5839

In this episode, we talk about:

[02:35] Episode Summary – Ian Battersby discusses leasehold compliance, including establishing responsibilities and gathering evidence to ensure your legal and related ISO requirements are being met.

[02:45] What is leasehold compliance? Many organisations don't actually own the property where they operate, it's very common for businesses to lease property.

A landlord will lease the property to a client and often appoint a building manager, managing agent to run it on their behalf and act as the interface with all the leaseholders.

Sometimes, the building manager will be part of a large organisation which also provide facilities management services. Often they'll only offer the most basic of services and will contract another party to provide further facilities management.

Whichever party provides general facility management services will almost certainly need to contract another layer of providers responsible for specialist services such as waste transfer, electrical / gas / aircon servicing.

Sometimes, the leaseholder will directly contract a third party for a service (air con, electrical, PAT, cleaning).So all in all, it can be quite a complex picture of responsibility!

[05:10] The complexities of leasehold compliance: It can be tricky navigating through this and demonstrating that you've fulfilled all your own legal obligations as well as gaining assurance that other parties have done what they need to do to protect you and your employees.

Often, those charged with liaising with the building manager are not experts in Health & Safety, Environment, Facilities Management and compliance. It might be the office manager who picks up this role.

In some cases, you have an absolute duty, even where the landlord has complete control over the service which is provided to you (e.g. waste management).

[06:45] Establishing Responsibility: Establish who owns what, who is responsible for things such as building fabric, installed services, the contracting of support services.

But, regardless of actual ownership and the direct responsibility for a particular aspect of a building, there is always an interrelationship, a dependence between building, infrastructure elements.

For instance, you may use a whole floor which has been fitted out for your own purposes, you own the electrical installation from the walls inwards, but that links into the electrics beyond your own shell.

You may have certain responsibilities in your own area for firefighting equipment, fire doors etc, but fire safety also depends on things like:

· The escape routes

· The building's fire alarm

· Emergency lighting

· Protection of the common areas such as the lobby

If the building isn't safe beyond your own demise, your own demise isn't safe.

While you may not have direct control over these aspects and your legal responsibilities, leases may leave the burden on you to seek evidence.

Although there should be demonstration of various compliance obligations throughout the pre-let enquiries process. You may even be lucky enough to have a lease clause which requires landlord to complete or contribute towards compliance reporting.

[08:30] What subject areas relate to ISO compliance?: Standards where leasehold compliance is particularly relevant include ISO 14001 environmental management and ISO 45001 Health & Safety management.

For both of these, there may be a need for you to provide your own evidence or seek assurance from a third party. The examples we're providing here apply to office locations and for more complex, more industrial, more heavily commercial premises.

Considerations / requirements for either one of both of these Standards include:

Energy performance certificates:

Legally required documentation. They rate the energy efficiency of a property from A to G, and they have to be provided prior to leasing and on leasing. These can apply to a whole building or just a wing or floor of a building. These can be verified online via a .gov portal.

As of the 1st of April 2023, any commercial property in England or Wales must have a minimum energy performance certificate rating of E. However, this is set to change after consultation, so from April 2031 you won't be able to let property unless it's in the A or B band.

Recommendations Report:

This supplements the previously discussed energy rating. This report, as the name suggests, provides recommendations for improving efficiency. If you're already rated an A or A+, then there may not be too many recommendations. But C and below will have some that will improve your building over time.

It's important to note that there is no mandatory obligation to action these recommendations, and some provided can be quite generic and not at all applicable. However, you should seek through the landlord and ask if they're following through on any of the recommendations to improve energy performance, particularly if you will be looking to renew leases around the time that the law changes.

Air Conditioning:

If your building is relatively new, less than five years, you will really need to see the installation and commissioning information associated with air conditioning.

There should be records of building control, electrical installation, commissioning certificates, and also a test which is called a TN 44. This test is legally required once on installation and then again after every 5 years. It needs to be carried out by an accredited energy assessor, who can be verified via the same Government portal as the Energy performance certificates.

This applies to any system with an effective rated output of more than 12 kilowatts, which quite simply, is nearly all commercial offices.

The TN 44 test will also provide a report which includes recommendations on how to use the equipment, the management regime for its setting points for temperatures and other such advice to keep it working as efficiently as possible.

The person responsible for air conditioning is responsible for this certificate. If you own the aircon in your demise, it's yours, if the landlord owns the aircon, it's theirs.

F Gases:

Any system which contains fluorinated greenhouse gases, so what we call F gases, needs to be inspected regularly to ensure that none of the gas leaks and to ensure that they're operating at optimum efficiency.

This can includes things such as air conditioning, heat pumps, Fire Protection (aerosols and foams) and is often used in various parts of Industrial Manufacturing.

If there are any leaks, they need to be logged, replacements need to be made, recharge needs to be done, and all this needs recording in a logbook.

When it comes to servicing of anything that uses F Gases, you need to check the competence of those individuals. Refcom has a register of accredited / approved companies that provide these services.

Fire Risk Assessments:

Fire Risk Assessments are legally required documentation which needs to be carried out by a competent person.

There isn't a prescribed frequency on fire risk assessments, but you should really be reviewing them at least annually and doing a full reassessment on a three-year period – or when there has been a significant change to the layout / occupation of the building.

There is a mandatory way of completing a fire risk assessment, PAS 79, which is a publicly available specification. So you need to check that yours are being done in alignment with this Standard as this provides proper risk evaluation and an action plan which is prioritized according to the level of risk.

It may also be worth checking with your insurance organization or any local authorities whether they have a prescribed frequency for your fire risk assessments.

Fire Alarms:

You will no doubt have a fire alarm within your building, this may be the landlords own fire alarm system or it may be one you as the leasehold business own. As a starting point, you need to understand who has ownership of this.

On installation and commissioning, you must comply with certain standards. For the UK this is BS 5839, which requires building control, a commissioning certificate, handover certification, the correct drawings, a manual, a logbook, specific training to the owners and users of the system.

Every six months you should have a competent person complete maintenance, servicing and inspection to ensure that the way the fire alarm was installed is the way it remains in compliance with BS 5839.

As well as a six-monthly inspection, there is also a competent person test and inspection over elements over and above that, which requires certificate issuing annually.

There's also a full test and inspection of the wiring underpinning the fire alarm system. This isn't prescribed, but it's commonly conducted at 10-year intervals.

Fire Extinguishers:

You may own the fire extinguishers in your own demise or they may be owned by the landlord.

What you need to do is, if you own fire extinguishers within the organization, take responsibility for regular walk arounds to check that they're all in the right locations, the right numbers are present, that they are accessible, secure, fully charged in the green zone, undamaged, the seal is untampered, and the service date is correct.

Every year, you need a competent person to come in and check the fire extinguishers fully, record this in the fire logbook and provide a certificate of service for each of the extinguishers in use. Depending on the type of extinguishers you've got, you may need a five yearly or possibly longer frequency extended service.

Other Fire Suppression Systems:

You might have a fire sprinkler system which will require installation and commissioning certificates. Regular inspection maintenance service will then depend on the type of system, this could be anywhere between a quarterly, annually, five yearly, 10 yearly inspection regime.

There should be evidence that there is some form of local regular inspection to check that there is no visible damage to a fire suppression system.

We would advise you to discuss with your landlord about what process exist for those inspections.

There are also fire doors that need both competent person checks on a six month to annual basis to check for the physical robustness for the opening and closing mechanisms for external escapes to open correctly.

But there should also be regular checks by local representatives within your organization of any fire doors within your own demise and from your own demise to check that they are physically sound and operate correctly.

The escape routes from those should also be checked by the landlord for any obstructions beyond your demise to see that there's an adequate, safe path from the building in the event of a fire.

Emergency Lighting:

There is again a regular monthly checking to see that emergency lighting comes on should the power go down.

Sometimes that's by flick testing, nowadays, some buildings have automated testing of their emergency lighting. This requires an annual inspection be a competent person, which will result in a test certificate as proof of inspection.

Gas servicing and electrical wiring inspection:

Gas servicing is required once a year by a gas safe, registered, competent person, and the resulting certificate will indicate whether there are any recommended actions.

With electrical installation and condition reports (EICRs), Electrical and fixed wiring is checked every five years and on installation and commissioning as well.

These have different levels of findings, including:

· C1, danger is present

· C2, potentially dangerous

· C3, improvements recommended

· And FI, further investigation

Anything which is a C1 and C2 needs to be addressed, anything which is an FI requires seriously looking into to see what the implications are.

If you have your own EICR for your own demise, you should be checking the content of that to see what the recommendations say, not just accepting the certificate as if it is the gospel says your equipment is safe.

If the landlord is responsible for an EICR in other parts of the building, you should liaise with the landlord to see what implications there are for you.

[29:15] How to plan for leasehold compliance and gathering evidence: What's your strategy for making sure you are safe and you know you're safe and you can provide assurance of that safety?

If you've got direct control of the contracting of any services, then it can be quite straightforward because you control the contractor:

· You should be verifying the contractor's competence.

· You should be verifying that they're providing the right service, maintenance, inspection, test documentation.

· You should have within that documentation recommendations, risks, actions that you can then take forward.

But if you rely on the landlord's agent, for instance:

· You have to rely on cooperation with them.

· You also have to rely on their own understanding of their obligations and their record keeping.

You'll need to approach them with a structured list to request all the things you need to meet your legal requirements. Work out a way to retrieve what you need, as they need it as well, so it should be straightforward once they've sourced it to provide you with it.

If you have any regular tenant, landlord, managing agent meetings, use those to review compliance and any progress on recommendations. If those meetings don't exist, perhaps you could set up some form of regular meeting where you can assess your level of compliance and monitor any movement in that.

Where you've received any record from a service, a maintenance, a test, a certification or an assessment, study that carefully. See where the risks are and follow through on relevant recommendations.

If you'd like any assistance with navigating leasehold compliance or implementing ISO standards, get in touch with us, we'd be happy to help!

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