Where a commercial property in Scotland is let to a tenant, the tenant will generally be liable for water charges and the landlord will not. However, landlords can unwittingly become jointly liable with their tenants for water charges unless they take steps to avoid this.
What the law says
The legislation governing water charges says that the occupier of a property, and not the owner, is liable for water charges.
However, it also says that the landlord of a commercial property must tell the water provider if there is a change in occupancy at the property i.e. if a new tenant moves in or the premises fall vacant.
In particular, the landlord must give the water provider certain "required information", namely (i) the address of the premises, (ii) the identity of the new owner (or the fact that the premises have become vacant) and (iii) the date on which the change occurred.
Crucially, the legislation goes on to say that if the landlord fails to provide the required information then, unless they have a reasonable excuse, the landlord will be jointly and severally liable with the tenant for the water charges at the property. This means that the water provider can choose to pursue the landlord for water charges instead of (or as well as) the tenant.
In some circumstances, the landlord may be able to recover any water charges it pays from the tenant under the lease. But if the tenant fails or is unable to pay then the landlord could be left out of pocket. This problem is particularly stark in the case of tenants that are insolvent or have been dissolved – the water provider will inevitably pursue the landlord for unpaid charges if it can and the landlord may have no prospect of recovering these sums from the tenant.
What landlords and their agents need to do
To avoid joint and several liability for water charges arising, landlords and managing agents should ensure that any changes in occupancy are communicated to water providers and that all of the required information is provided.
The legislation doesn't impose a deadline by which changes of occupancy need to be notified, so there is a degree of uncertainty about the effect of a landlord notifying a water provider about a change in occupancy some time after the change actually occurs. The safe course, however, is for landlords and their agents is to supply the required information as soon as possible after the change in occupancy.
If the landlord or its managing agent knows who the water provider for the premises is then they can provide the information by email or letter. Alternatively, the information can be provided via the Scottish Landlord Portal, which exists solely to enable landlords to supply information on changes of occupancy to providers.
For advice on liability for water charges, or any other commercial property dispute, get in touch with our market-leading Real Estate Litigation team or your usual Brodies contact.
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