Key Issues Commercial Landlords Must Address: Mould, Water Ingress, and Tenant Rights

Commercial landlords face a variety of challenges when maintaining their properties. One of the most significant and recurring issues is the presence of mould and water ingress, which can cause health risks and property damage. These issues are especially pertinent in flood-affected areas, where moisture and contaminants exacerbate the situation.

In this blog, we will explore the legal obligations of commercial landlords, the rights of commercial tenants regarding mould and water ingress, and best practices for landlords to mitigate these risks.

Understanding Mould and Water Ingress in Commercial Properties

Mould is a type of fungus that thrives in damp, humid conditions. In commercial properties, it often develops as a result of water ingress—the unwanted penetration of water into the building through walls, roofs, or floors. This can occur due to structural defects, poor maintenance, or natural disasters like floods.

When mould grows, it can lead to significant health risks, particularly for individuals with allergies, asthma, or weakened immune systems. Prolonged exposure to mould in the workplace may result in respiratory issues, skin irritation, and even long-term health problems. Therefore, landlords must prioritise mould prevention and water damage repair to ensure the safety of their tenants and compliance with their lease obligations.

Obligations of Commercial Landlords Regarding Mould and Water Ingress

Under NSW law, commercial landlords are required to provide a safe and fit-for-purpose space for tenants. According to Fair Trading NSW, landlords must meet the following obligations:

1. Maintain Structural Integrity
   Commercial landlords are responsible for maintaining the property’s structural integrity, including preventing water ingress. This means ensuring that roofs, gutters, walls, and plumbing systems are in good repair to prevent water from entering the premises and causing mould growth.

2. Repair and Maintenance Obligations
   Landlords must ensure that the property is in a state that is suitable for its intended commercial use. If a tenant notifies the landlord of a water ingress or mould issue, the landlord has an obligation to take immediate action to resolve the issue. Failure to do so may expose landlords to legal action and complaints lodged with NSW Fair Trading.

3. Health and Safety Compliance
   Commercial landlords must also comply with workplace health and safety regulations, as mould can create hazardous working conditions for tenants and their employees. Neglecting to address mould problems can lead to significant legal liability under SafeWork NSW guidelines, which provide practical advice on reducing mould-related safety risks.

4. Provide Fit-for-Purpose Premises
   The property must be fit for the tenant’s business purposes. If water ingress or mould issues interfere with the business operations, the tenant may have grounds to seek remedies, such as rent reductions, compensation for loss of business, or early termination of the lease.

5. Regular Inspections and Preventative Measures
   Landlords are encouraged to carry out regular inspections of the property, particularly in areas prone to moisture or leaks, to catch potential problems before they escalate. Preventative maintenance, such as fixing roof leaks, ensuring proper drainage, and using moisture-resistant materials, can prevent future issues.

Rights of Commercial Tenants Regarding Mould and Water Ingress

Commercial tenants in NSW also have rights when it comes to mould and water damage in their rented premises. Here are some key rights that tenants should be aware of:

1. Right to a Safe Workplace
   Tenants have the right to a workplace that is free from health and safety hazards. Mould is considered a significant health risk, particularly in flood-affected properties. If the landlord fails to address water ingress or mould issues, tenants can make a complaint to NSW Fair Trading or seek advice from SafeWork NSW.

2. Notice of Repairs
   Tenants are required to notify the landlord promptly if they discover mould or water damage in the premises. This notice must be in writing, as documentation is essential in case the issue leads to legal disputes.

3. Rent Reductions and Compensation
   If water ingress or mould issues make the premises unusable or interfere with business operations, tenants may be entitled to a rent reduction or compensation. This can include situations where parts of the premises are inaccessible or unsafe due to mould contamination. Tenants should seek legal advice to explore these remedies if the landlord fails to address the problem.

4. Early Lease Termination
   In extreme cases, where the property becomes uninhabitable or unsuitable for business use due to water ingress or mould growth, tenants may have the right to terminate the lease early. This is typically only available when the landlord is either unwilling or unable to rectify the issue after being given proper notice.

5. Dispute Resolution via NSW Fair Trading
   Tenants who are unable to resolve mould or water ingress issues with their landlord may be able to file a formal complaint with NSW Fair Trading. The agency can assist with mediation and other dispute resolution mechanisms to ensure that tenants’ rights are upheld.

Best Practices for Commercial Landlords: Preventing and Addressing Mould

Given the legal and financial risks associated with mould and water ingress, commercial landlords should take proactive steps to prevent these issues from arising and deal with them effectively if they do.

1. Regular Property Inspections
   Inspect the property frequently, paying particular attention to areas that are prone to leaks or moisture, such as basements, roofs, and windows. Look for early signs of water ingress, such as peeling paint, damp walls, or a musty smell.

2. Prompt Repairs and Maintenance
   When a tenant reports water damage or mould, respond quickly. Engage a professional to assess the extent of the damage and determine the root cause. Timely repairs not only protect the property but also help avoid disputes with tenants and potential legal claims.

3. Use of Moisture-Resistant Materials
   Consider using moisture-resistant building materials, such as water-repellent paints or sealants, in areas that are prone to dampness. Installing proper ventilation systems can also help reduce humidity levels in the building, making it less susceptible to mould growth.

4. Educating Tenants
   Provide tenants with information on how to prevent mould and what steps to take if they notice any signs of water damage. This could include advice on keeping the premises ventilated, cleaning up minor leaks promptly, and notifying the landlord of any issues as soon as they arise.

5. Professional Mould Remediation
   In the event of significant mould growth, it’s crucial to engage professionals for remediation. Attempting to clean up mould without proper equipment or expertise can exacerbate the problem. Professional mould remediation ensures that the affected areas are thoroughly cleaned and that the source of the water ingress is addressed.

Conclusion

Dealing with mould and water ingress is a serious issue for commercial landlords, particularly in NSW, where regulations are in place to protect both landlords and tenants. Landlords must ensure their properties are structurally sound, well-maintained, and free from health hazards like mould. By staying proactive in maintaining their properties, commercial landlords can avoid costly repairs, legal disputes, and potential liabilities.

For commercial tenants, understanding your rights and obligations is key to ensuring a safe and productive working environment. If you encounter mould or water ingress in your leased premises, notify your landlord promptly and take steps to protect your business and employees.

If you’re a commercial landlord or tenant in NSW and need advice on dealing with water ingress or mould issues, contact our experienced property law team for professional assistance.