Mixed-Use Property Management
A shop under a block of flats is not a complication. Getting the apportionment wrong between them is.
Where Mixed Use Gets Difficult
The building is one structure and the leases are two different animals. Commercial leases are usually shorter, negotiated individually, and outside the residential service charge protections entirely: the reasonableness test in section 19 of the Landlord and Tenant Act 1985 and the Section 20 consultation requirements apply to residential leaseholders, not to commercial tenants.
That means one building, two regimes, and a service charge that has to be apportioned between them in a way that both sets of leases actually support.
Schedules, and Why There Is Usually More Than One
Most well-drafted mixed-use developments run separate service charge schedules: one for costs benefiting the whole building, one for residential-only costs such as the residential entrance and lift, and one for commercial-only costs. A single pooled schedule almost always means residential leaseholders paying for something they have no access to, and that is the shape of dispute that ends up at the tribunal.
Where the leases do not provide for separate schedules, the honest answer is that the apportionment is constrained by the documents, and that a deed of variation may be the only way to fix it properly.
Compliance Across Two Uses
Fire strategy is the one that matters most. A commercial unit at ground floor changes the risk profile of the residential floors above it, and the fire risk assessment has to consider the building as a whole rather than the flats in isolation.
The Regulatory Reform (Fire Safety) Order 2005 applies to the common parts of the residential element and to the commercial premises in full, and there is often more than one responsible person. Where that is the case, article 22 requires them to cooperate and coordinate with each other.
Where We Do This
From our Plymouth office, across Devon, Cornwall and the wider South West. Each area page sets out the authority, the fire and rescue service and the local building stock.
Common Questions
Do Commercial Tenants Pay the Same Service Charge as Flats?
Not usually, and often they should not. Well-drafted mixed-use leases provide separate schedules so that each element pays for what benefits it, with shared structural and insurance costs apportioned across the whole. The apportionment is set by the leases.
Does Section 20 Apply in a Mixed-Use Building?
It applies to the residential long leaseholders. Commercial tenants are outside the residential service charge regime, so a consultation has to be run for the residential element on the residential share of the cost.
Who Is the Responsible Person for Fire Safety?
There is frequently more than one in a mixed-use building: whoever controls the residential common parts, and whoever occupies each commercial unit. Article 22 of the Fire Safety Order requires them to cooperate and coordinate, and since October 2023 to exchange names and a UK address for service.
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