Dilapidations

For Landlords

What is it all about?

Your tenant has probably signed a lease requiring them to comply with certain repairing, redecoration and reinstatement provisions. If they do not comply with these requirements you could be disadvantaged by having to complete the works and recover costs or yield to less favourable re-letting terms. Dilapidations is the process whereby the landlord is put into the position they would have been had the tenant complied in full with their lease covenants.

Why might you need us?

Dilapidations is a complex area of law and practice. Tenants are often unaware of their obligations and one choice you have is whether to produce the schedule before or after the end of the lease.

We will review all relevant lease documentation and advise on the most appropriate strategy in the circumstances. Timely advice will lead to the best chance of either the tenant complying with their obligations or a timely resolution if they do not.

Failing to deal with dilapidations means a landlord is likely to see the overall condition of the premises fall, resulting in reduced value of the asset. It is common for the landlords costs to be recoverable so taking a proactive approach is often a cost neutral solution.

Those dealing with dilapidations need to be aware of the Property Litigation Association “Dilapidations Protocol” which sets out the processes and time-scales to follow. Additionally, as members of the RICS, we comply with the relevant Practice and Guidance Notes.

Where a commercial lease is approaching expiry we can consider the merits of any potential dilapidations requiring to be remedied by the outgoing tenant. This will generally include reviewing the lease and any other relevant documentation, inspecting the property and preparing a schedule of dilapidations, which may be costed.

The issue of dilapidations relates to the landlord’s loss and this can sometimes require an assessment of the value of the property – a diminution valuation. We work alongside valuation surveyors to produce these when required.

Our services include negotiation with the outgoing tenant or their surveyor with the principle aim of reaching an amicable settlement without resorting to litigation.

We will arrange and oversee works if that route is pursued.

For Tenants

What is it all about?

As an outgoing tenant, you are likely to be served with a schedule of dilapidations by the landlord either before or soon after expiry of the lease. The schedule should only include a record of all those works which the landlord considers you should have, but have not completed under terms of your lease agreement.

The underlying principle is that the landlord should not be worse off as a result of your occupation of their premises.

Why might you need us?

We are experienced in reviewing landlord’s dilapidations claims and will provide advice on whether the claim could be reduced or your potential liability negated either through completing the work, applying relevant case law or valuation assessments.  It is not uncommon for a landlords initial claim to be reduced significantly following our involvement.

Dilapidations is a complex area of law relating to the condition of a leased commercial building.  We deal with dilapidations matters under the relevant RICS Practice and Guidance Notes and the Property Litigation Association (PLA) Dilapidations Protocol.

We offer a Dilapidations Liability Assessment report, which allows tenants and occupiers to understand what their liability is likely to be at the end of their lease.  This can be beneficial to the tenant in following Financial Reporting Standard, FRS 12: Provisions, contingent assets and contingent liabilities.