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Commercial Landlords and Water Charges: What Do You Need To Know?

The Water Resources (Scotland) Act 2013 (which brought into force sections 20A to 20D of the Water Services etc. (Scotland) Act 2005) requires all commercial property owners to inform their licensed water or sewerage supplier of any change in occupancy at a premises and when the property becomes vacant. A key point is that as of 1st January 2017, if a commercial property owner fails, without reasonable excuse, to inform the property’s water provider of a change in occupation, the owner becomes jointly and severally liable with the occupier for any charges that may become due. The risk to owners is that they may grant a lease to a new tenant company, which becomes bankrupt after a year.  If the owner did not inform the water provider of the new tenant, the water company can look to the owner for the costs that the tenant should pay.  In this example the owner would likely be stuck having to pay the costs, given that the tenant company has become bankrupt.

The legislation is unclear as to how quickly an owner must inform the supplier of a change in occupancy and therefore the safest course is to ensure that this notification is part of the process when granting a new lease, transferring an existing lease, terminating a lease or selling a property.  The Scottish Government may eventually make regulations setting out exactly when notice must be given.

On another note, historically, vacant properties in Scotland were exempt from water, waste water and drainage charges. The Scottish Government has formed the view that this is unfair and, as of 1st April 2017, owners of vacant properties became liable for such charges. No changes to legislation were required. Although vacant properties are not actively being used, owners still benefit from the continued availability of water services. In particular, there is a reliance on drainage services to avoid flooding to properties.  If you do not wish to pay these charges your property can be disconnected from water and waste water services. However, disconnecting your supply is permanent and is typically only done for properties being demolished. There are costs involved in both disconnection and reconnection, and the owner would still be liable for the drainage charges. Another option may be to install a meter, which could reduce some of the charges.

To assist commercial property owners and others acting on their behalf with managing properties and keeping track of any occupancy changes, the water industry created a useful tool: the Scottish Landlord Portal. The portal allows users to record their portfolio of properties and to update any individual property when there are changes to tenant details, including a change of tenancy, when the property becomes empty or when the property is sold. This information is automatically made available to the relevant supplier removing the hassle of owners having to personally contact the supplier upon any change and reduces the risk that the water provider may try to make the landlord liable for charges that the occupier should pay. The Scottish Landlord Portal can be found at https://slp.cmascotland.co.uk/.

This article is for general information only. Nothing in this article should be taken as legal advice. If you would like to discuss any of the issues raised in this article, or any other property related matter, please get in touch with a member of the Commercial Property team.

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