Dilapidations v Covid-19
In the shadow of Covid 19, tenants are reviewing working practices and occupational needs whether it be amalgamating the number of sites, downsizing or exiting premises. Some of these decisions were already being made pre Covid -19 others prompted by recent events. Surveyors are still undertaking inspections where the social distancing rules can be adhered to and if they have appropriate PPE.
As with all activities requiring inspections at this time, more time needs to be allowed to enable occupiers to make the appropriate arrangements to ensure the safety of their staff and the visiting surveyor.
Schedules are served to company’s registered addresses which may not be occupied due to more people working at home will cause delays to receiving a response from the occupier and/or their representative and possibly outside the PLA timeline of 56 days. In addition, copies of delivery certification is also emailed to directors personal addresses to demonstrate delivery in accordance with lease requirements and also alert them to the issue of documentation.
Delays are also occurring in obtaining responses from surveyors acting for the opposing parties as some have been furloughed. However, when mid-way through a negotiation process there is no sense in appointing an alternative surveyor who is not familiar with the property as this will incur further time and fees. Patience is required in these unusual times. The PLA protocol offers guidance and is good practise to follow however it is not a mandatory process. It is likely a judge would frown upon a court action being brought on the grounds of this type of delay due to Covid 19.
Some occupiers are finding it difficult to undertake dilapidations works to comply with break notices due to contractors not able to follow the social distancing rules, contractors furloughing staff and also problems with obtaining materials as some are in short supply or builders merchants temporarily closed. It is likely over time this will lead to an increase in contractors’ prices.
We anticipate landlords will be more stringent in reviewing lease break conditions in an attempt to frustrate breaks and ultimately retain tenants for the duration of the lease term.
Due to difficulties in procuring and carrying out works it is likely that landlords will offer financial incentives from dilapidations claims to ingoing tenants, rather than undertaking dilapidations works themselves.
Market values are unclear at this stage and therefore Section 18 valuations are an unknown. However, it is currently anticipated there will be a surplus of office accommodation following changes in working practises leading to landlord’s looking at alternative uses for some office buildings.
This is unchartered territory with little understanding behind ‘post lockdown’ however we will be required to adapt our services to comply, for a greater understanding and advice on strategy and exit please contact: