What vacating tenants should know about dilapidations

Dilapidation is the term normally used to describe the condition and state of (dis)repair of a property due to maintenance neglect. Specifically, it is also used to refer to the remedial costs incurred by the tenant vacating the leased premises to restore the property back to its original pre-let condition. This is a particular area of law relating to breaches of lease obligations or covenant by the tenant.

Dilapidations claims in the form of a Schedule of Dilapidations can be made by the landlord against the tenant at any point – during the lease term, towards the end of the lease, or after lease expiry. The document will detail breaches of the tenant’s lease obligations with regard to any physical alterations and their reinstatement, repair and redecoration.

A tenant can challenge the landlord’s list of required repair work, preferably with the professional advice and guidance of a commercial surveyor who has experience in this area. Tim Greenwood & Associates are specialist providers of Schedules of Dilapidations for properties in London, Surrey, Sussex and across the South East. We’ve been acting on behalf of landlords and lessees for over 20 years, advising on the best strategies for reaching a fair financial settlement.

When should you start thinking about dilapidations?

As experienced dilapidations surveyors, we would strongly recommend that both parties consider the matter of dilapidations before the lease is signed and, in any event, well in advance of the end of the lease. It is highly advisable to record the condition of the premises before you take up occupation, by way of a Schedule of Condition, which we can help prepare on your behalf.

During the term of the lease, bear in mind that regular and planned maintenance can help avoid greater expense later on. Expect the landlord to serve a Terminal Schedule within the last year of the lease term, ideally with enough time to allow agreement to be reached, the necessary works to be completed and a financial settlement reached.

What happens if you lease premises that are in a poor state of repair?

Typically, a commercial lease will put the onus on the tenant to put and keep the property in good repair. If the premises are not in good condition when you sign the lease, you could face additional repair costs. In this case, you should try and negotiate a lower premium or a lower rent to compensate for this.

Alternatively, your landlord could agree for the premises to be returned in a similar condition to the state at which they were in at the start of your occupancy. In this case, it is essential to obtain a Schedule of Condition attached to the lease. You should also ensure that your solicitor varies the lease to take account of your reduced obligations.

Are you able to make alterations to the premises?

Your position with regard to alterations to the property made during your tenancy largely depends on the terms of the lease and any permissions granted by the landlord. It is likely that consent for alterations is granted on the basis that the property will be restored to its original state upon the landlord’s request.

This means that the landlord may decide to keep the alterations made by you if he thinks they have added value to the building. Otherwise, you will be asked to reinstate the property at the end of the lease, or pay for any reinstatement costs incurred by the landlord.

How should you deal with your landlord’s dilapidations claim?

We would advise all tenants to take professional advice before accepting any claim made by the landlord. Landlord/tenant disputes regarding a Schedule of Dilapidations can and do arise, and they can be costly to deal with. With an experienced team of dilapidations surveyors on your side, Tim Greenwood & Associates can provide expert assistance to protect your interests and manage the situation.

We use a standard approach for undertaking dilapidations surveys to ensure that your landlord’s claim against you is a fair reflection of the tenant’s obligation in accordance with the lease. We may even be able to reduce the figures or demonstrate that certain items should not have been claimed. If, for instance, the landlord has plans to demolish or alter the building rather than repair it, you would have a good legal case against the Schedule served.

What happens when no agreement with the landlord is possible?

If landlord and tenant cannot reach agreement regarding a dilapidations claim, the landlord has recourse to the court. This is a slow process and expensive undertaking for both parties. If the matter does get to court, Tim Greenwood & Associates may be able to act as an expert witness on your behalf if necessary. Dilapidations disputes can also be resolved by mediation, expert determination and arbitration.

The team at Tim Greenwood & Associates has extensive experience in preparing both terminal and interim Schedules of Dilapidations for landlords and also defended them on behalf of tenants. We have the expertise to fully advise on the implications of claims for both landlords and tenants. For more information and to discuss you particular dilapidations matter, please get in touch.