Dilapidations

Dilapidations

The term dilapidation is usually used to refer to the condition of a property during or at the end of its occupancy, and the costs a tenant has at the end of their lease to restore the property back to its original state or pre-let state. However, at all stages of a property lease, and not only at termination, questions are inevitably raised around dilapidations. For example, what can the landlord expect in terms of the building’s state of repair and what will it cost the tenant to remedy any breaches of covenant?

At Carter Jonas, our professional team of building surveyors can advise on both tenant dilapidations and landlord dilapidations, providing each of our clients with expert advice. 

How can Carter Jonas help with your dilapidations liability?

We offer expert dilapidations advice at every stage of a lease term to both landlords and tenants. Specifically:

• Preparing terminal schedules of dilapidations
• Preparing interim schedules of dilapidations during lease terms
• Negotiating financial settlements for landlords and tenants on termination of a lease
• Monitoring lease expiry works for tenants
• Tendering, project managing repair and reinstatement works for tenants prior to lease end, or for landlords after expiry of the lease
• Preparing dilapidations assessment reports prior to new leases being granted or during the term of the lease
• Providing schedules of condition at lease commencement
• Dilapidations experience across all commercial asset classes
• S18(1) valuations
• Advising on VAT for dilapidations

Landlord dilapidations

A landlord can instruct a building surveyor to prepare a schedule of dilapidations to document the breach if a tenant fails to comply with the terms of the lease. Read more about this on our guide to dilapidations for landlords.

Tenant dilapidations

If a tenant fails to comply with the terms of the lease, they could be faced with a significant bill to recover the loss incurred by the landlord as a result of those breaches. Read more on our guide to dilapidations for tenants.

Dilapidations covenants

All commercial leases contain covenants, i.e. a set of rules on what can and cannot be done on the land or in the property, which require tenants to repair and decorate buildings and maintain the land they occupy, in addition to complying with the relevant statutory requirements. Any alterations or additions to the building may have to be removed, if required by the landlord, through the landlord’s claim document called schedule of dilapidations. This document will refer to any breaches of the tenant’s lease obligations.
The wording of such covenants can be complex and the emphasis on the structure of each clause can affect the tenant’s liability, as well as the landlord’s expectation of the condition of the building at the end of the lease. Repairing covenants may be limited by a schedule of condition, which can impact a dilapidations claim. Landlords may wish to claim for loss of rent or other mesne profits. These can include service charges and insurance premiums or professional fees.

Why might you need a dilapidations surveyor?

An important consideration is whether the lease covenants or the circumstances at expiry of the lease will allow a claim to be successful. All this requires careful consideration and interpretation when assessing the potential dilapidations liability at the end of the lease and how this may affect a potential claim. A surveyor can provide help with understanding lease obligations, as well as managing tenants on how to comply with them. A correct assessment of dilapidations, by an experienced dilapidations surveyor or building surveyor, can guide landlords and occupiers in a range of property decisions. For example, whether they should renew a lease or exercise a break clause, or whether to re-let or redevelop.

Also, the evolution of the PLA Pre Action Protocol has significantly influenced the way dilapidations issues are resolved by placing the emphasis on achieving an early resolution of claims by both parties. Our considerable experience enables us to provide our clients with reasoned and pragmatic advice to encourage early resolution, thereby avoiding costly disputes and helping both parties to move on quickly after lease expiry.