UK: Know Your Obligations - Management Of Mixed-Use Premises

Last Updated: 29 July 2013
Article by Richard Flenley

It is not uncommon for pharmacies to be located within mixed use buildings where the "other" use is residential. Frequently the pharmacy is either the freehold owner of the entire building or has a lease of the whole (i.e. in both cases including the residential element which are usually upper floor flats).

This can cause complications that, whilst presenting income potential, need to be navigated in order to ensure compliance with relevant law relating to residential property. Part One of this article focuses on some of the key issues not directly associated with termination of the residential tenancy. Termination is a detailed and complex area in its own right so will form Part Two.

Nature of the Tenancy

This is the most important question to ask as landlord because the rights and obligations can differ wildly according to tenancy type.

Most tenancies for these types of residential occupation will be assured shorthold tenancies. However, it is vital to carefully review each proposed or current tenancy and ensure that you are comfortable with its basis, taking professional advice where necessary. It is easy to get caught out.

The balance of this article assumes an assured shorthold tenancy is in place.


Usually at the beginning of a tenancy the tenant will supply a deposit to provide security against any breaches by the tenant of their obligations (such as a failure to pay rent or causing damage to the property). The amount of such deposits varies but is typically equivalent to 6 weeks' rent.

Since 6 April 2007, where such a deposit is paid it must be protected via one of the tenancy deposit schemes registered with the Government.

There are two types of such schemes: The first are insurance based schemes where the landlord retains the deposit but pays an insurance premium to protect it. The second are custodial schemes where the entire deposit is paid to the scheme who then administers it. The only three schemes that can be used are:

  • Deposit Protection Service (custodial scheme)
  • MyDeposits (insurance based scheme)
  • Tenancy Deposit Scheme (custodial scheme)

The legislation (Housing Act 2004) that creates this requirement also stipulates that the deposit is protected within 30 days of it being received.

Further, in order to ensure compliance with the legislative framework, certain prescribed information must be provided by the pharmacy landlord to the tenant(s) within the same 30 day period or such other period, if different, that is provided for in the relevant scheme rules. This can be as little as 2 weeks from the deposit being registered with the chosen scheme.

Failure by the pharmacy landlord to comply can, if left un remedied, severely hamper the landlord's ability to regain possession of the property .It could also result in the landlord having to register the deposit late ; pay the tenant compensation of up to 3 times the deposit and/or repay the deposit to the tenant!

However, recent cases have supported landlords remedying the position late, although prior to the Court hearing, and so it is not necessarily impossible to rectify a situation of breach.

Repairing Obligations and Health and Safety Issues

Even though the tenant occupies the property, the pharmacy landlord still owes statutory repairing obligations to the tenant (and any other occupiers, visitors or trespassers). These obligations are predominantly (although not exclusively) to be found in the Occupiers Liability Acts, the Defective Premises Act 1972 and the Landlord and Tenant Act 1985.

The former two Acts impose landlord obligations concentrated on the physical hazards associated with property - particularly when it is not properly maintained. They also impose penalties for non-compliance.

The Landlord and Tenant Act 1985, creates specific repairing obligations for landlords. Section 11 of this Act requires pharmacy and other residential landlords to keep in repair:

  • the structure and exterior of the dwelling-house (including drains, gutters and external pipes)
  • and proper working order the installations in the dwelling-house for supplying water, gas and electricity and for sanitation
  • and proper working order the installations in the dwelling-house for space heating and heating water.

Unless there is a cross over between these obligations and the very limited exclusions to these obligations then, once notified of the defect that needs repair, the pharmacy landlord must carry out the necessary works.

Failure to comply can result in a claim for damages and/or specific performance of the pharmacy landlord's obligations.

It is therefore key to ensure compliance and to ensure that you are aware of all of your obligations by seeking full professional advice at the outset of any tenancy and on the happening of any key event.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Richard Flenley
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