Business premises are not just about the walls and floors. There is bound to be some equipment and fittings in the premises. Once you are in occupation, you might add to them by building cabinets or installing air conditioning.
A big question – especially at the end of the lease term when you want to know what you can take with you – is: Who owns these things?
The basic rule is that anything which is “annexed” to the premises becomes part of it and ultimately belongs to the landlord – it becomes a “landlord’s fixture”. You can’t take it away. You can’t change it without the landlord’s permission. At the end of the lease you must leave it where it is, and the landlord can include it as part of his premises when he lets to a new tenant.
Anything which is “annexed” to the premises becomes part of it and ultimately belongs to the landlord – it becomes a “landlord’s fixture”.
Landlord’s fixtures will generally include everything installed by the landlord and items installed by you which have become part of the structure.
Basically, any articles that are attached to the property and are intended to be a lasting improvement are landlord’s fixtures. Built-in air conditioning ducts would be a typical example. Another test is whether it can be removed without causing serious damage – if it can’t it’s probably a landlord’s fixture.
But things that have been fixed to the property for the purpose of your trade or manufacture are regarded as “tenant’s fixtures” and you may remove those at the end of the lease term – as long as the lease does not specifically say otherwise, and as long as they are capable of being removed without irreparable damage to the premises.
There have been a lot of legal cases over the years about when a thing is “annexed” and when it isn’t.
In one case a judge ruled that a greenhouse resting on a concrete plinth by its own weight was not a landlord’s fixture. But in other cases something not physically attached to premises, but nonetheless intended to be permanent, and which could not be removed without it being destroyed, was annexed to the land and could not be removed.
There have also been cases about white goods which the tenant installed. The argument was over whether something can be said to be “annexed” if it’s connected to the mains services – like washing machines. Judges decided that they were not annexed to the land just because they were connected to mains services.
One landlord even tried to argue that a houseboat which was connected to the mains services when moored belonged to him as the owner of the mooring site. The houseboat owner won the case.
I’m making it sound as if everything is a bit uncertain and up in the air. But for the most part it’s fairly obvious when something becomes annexed to the land and therefore a landlord’s fixture.
If you are entitled to remove fixtures because they are “tenant’s fixtures” but it will involve some damage to the premises, you have an obligation to make the damage good before you leave.
The lease will probably say that you have to keep the premises in repair, and that usually includes landlord’s fixtures. If there is a central heating or air conditioning system, that means you have to put right any defects, keep it in working condition, and hand it back that way at the end of the term. It can be pretty expensive to turn a non-functioning air conditioning system into a perfect working state. So it’s definitely a good idea to check systems before you commit to the lease and, if there is any problem, either get the landlords to bring them up to spec before you move in, or get it recorded in the lease that you are not responsible.