Dilapidations for Tenants

When a tenant takes a commercial lease, there will typically be obligations for repair, maintenance, and decorations during the term. These are typically known as dilapidations.

Many tenants ignore or overlook these requirements during their lease as their priority is growing and sustaining their business.

Receipt of a dilapidations schedule and claim from the landlord can be an unpleasant shock. It is imperative to ensure your business is prepared where possible and represented by experienced dilapidations surveyors so that your interests are represented and you can mitigate your losses to the greatest extent.

Managing Tenants Dilapidations during the term of the lease

Always have in mind your repairing obligations while you are still in the property; do not leave them until the end of the lease term. Addressing issues on an ongoing basis will hopefully minimise the obligation and cost at the end.

Also bear in mind that a properly prepared provision for a future dilapidations liability is allowable as a deduction from a company’s tax computation. This could reduce the tax burden of a company during the term of a lease.

Towards the end of the lease, your landlord is likely to commission a dilapidations surveyor to prepare a detailed schedule setting out the areas where they believe you need to meet your lease obligations

Initially this will be served on you and, if you have time before you vacate, this is an opportunity for you to carry out those works or instruct your own dilapidations surveyor to assess the merit of the claim in line with the terms of the lease

It is important to seek experience specialist dilapidations advice. Just because the landlord’s surveyor says something needs to be done, that does not mean it does. Seek advice at an early stage on what you need to do.

Tenants Dilapidations once the lease has ended

When you leave the premises, the landlord will re-assess the property and may amend its claim. At this stage, it is likely that the claim will include an overall figure (broken down into stages) for the cost of dealing with the dilapidations.

Again, do not take the figure as gospel. We will be able to advise you on what is a reasonable figure or not. The claim is likely to include a claim for loss of rent and professional fees (the latter being a cost that the lease will normally require you to pay)

The dilapidations schedule will normally be served under the protocol set out by the Property Lawyers’ Association and endorsed by the courts. This should be served within a reasonable period of time (normally 56 days) after the lease has ended. It is advisable to ensure that you follow the protocol as closely as possible

The protocol will require you and your surveyor to respond in full within 56 days of receipt of the schedule. If agreement cannot be reached you will enter into a constructive dialogue with the landlord and its surveyor to try and reach agreement

How we can help with Dilapidations for Tenants

Negotiation is usually able to resolve any discrepancies or disagreements between landlords and tenants in dilapidation cases. Any conversation about dilapidations is typically technical and complex. Professional advice at the outset from our experienced team can greatly support your cause.

Our team are highly experienced in helping tenants with the following key services :

  • Dilapidations liability assessments in order to make financial provision in company accounts (and save money…)
  • Lease and dilapidations claim reviews, inspections of properties and dilapidations advice
  • Lease exit strategy advice
  • Managing loss mitigation dilapidations works for tenants
  • Negotiating down and achieving best possible savings to original landlords’ claims
  • Advising on appropriateness of diminution valuations

Contact

For any help or advice on Dilapidations issues, please call our Enquiry Line on 020 4534 3132, or contact a member of the team direct, details below :

Theo Channer

Director

DD : 020 4540 7001

M: 07881 577 345


Alexa Cotterell

Senior Director

DD : 0121 348 7301

M : 07377 564 613

To book a call back from a member of the Dilapidations team, please fill in our Contact Us form.

See our recent articles clarifying the VAT position on Dilapidations assessments.

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