Dilapidations

Navigating the complexities of commercial property leases requires a thorough and strategic understanding of dilapidations.

Our expert team at Anstey Horne offers comprehensive dilapidations consultancy services, providing impartial and robust advice to both landlords and tenants across the UK.

Our approach blends legal knowledge, commercial awareness, and practical surveying expertise to ensure optimal outcomes for our clients at every stage of the lease lifecycle.

Quick Answer: What Are Dilapidations?

Dilapidations are the costs and obligations associated with repairing and restoring a commercial property to its original or agreed-upon state, as specified in a lease agreement.

They typically arise at the end of a lease term and can result in significant financial claims if lease covenants have not been met.

What Are Dilapidations?

In the realm of commercial property, dilapidations refer to breaches of lease covenants relating to the condition and maintenance of premises.

These breaches typically involve issues of repair, reinstatement, and redecoration that tenants are obligated to address during and, crucially, at the end of their lease term.

Failure to comply with these obligations often leads to a formal claim from the landlord, which can result in significant financial liabilities for tenants.

Dilapidations can be understood as the “exit cost” for tenants, reflecting the cost of returning the property to the condition stipulated in the lease. This usually involves restoring the property to its pre-let or original state, depending on specific lease terms.

A landlord typically issues a Schedule of Dilapidations towards the end of the lease, which lists the disrepair items that the tenant must address.

This schedule can take different forms :

Interim Schedule : Issued during the lease term to prompt remedial works while the lease is ongoing.
Terminal Schedule : Served in the final 18 months of the lease, setting out the expected works to be completed before lease expiry.
Final Schedule : Presented after the lease has ended, often accompanied by a Quantified Demand summarising the landlord’s claim for damages, repair costs, and associated losses.

The financial implications of dilapidations can be substantial. Therefore, early engagement and strategic planning are essential for mitigating risks and costs for both parties.

Why Are Dilapidations Important?

Financial Risk Management : Dilapidations claims can run into hundreds of thousands of pounds, impacting financial planning.

Lease Strategy : Knowledge of potential dilapidations liabilities can influence decisions around lease renewals, exits, and break options.

Negotiation Leverage : Well-prepared parties are better positioned to negotiate favourable settlements.

Litigation Avoidance : Early advice and appropriate action can prevent disputes escalating into costly litigation.

Strategic advice on dilapidations helps ensure that landlords maintain the value of their assets, while tenants can manage and potentially minimise their end-of-lease liabilities.

Our Comprehensive Dilapidations Services

At Anstey Horne, we offer a full suite of dilapidations services designed to support clients throughout the lease term and beyond.

Our services include :

1. Lease Analysis and Risk Assessment

Understanding your obligations under the lease is critical. Our team reviews lease documents, licences for alterations, and any associated correspondence to provide clear, practical advice on repairing obligations, reinstatement provisions, and potential liabilities.

2. FRS 102 Dilapidations Assessments

For tenants, Financial Reporting Standard 102 (FRS 102) requires recognising liabilities for dilapidations obligations in financial statements. We prepare robust assessments to help companies accurately report dilapidations liabilities, ensuring compliance with accounting standards.

3. Strategic Advice on Break Clauses and Lease Endings

Break options and lease expiries present strategic opportunities and risks. We advise tenants and landlords on how best to navigate break clauses, including works required to comply with lease obligations and reduce exposure to claims.

4. Dilapidations Negotiation and Settlement

Negotiating a dilapidations claim demands a nuanced approach, balancing legal, technical, and commercial factors. We represent clients in direct negotiations, aiming to achieve fair settlements that reflect the true loss suffered.

5. Repair vs. Financial Settlement Advice

We help clients evaluate whether it is more cost-effective to carry out repair works before vacating or to negotiate a financial settlement. Our advice is always commercially focused, tailored to each client’s strategic priorities.

6. Procurement and Management of Repair Works

Where clients elect to undertake repairs, we manage the procurement and delivery of remedial works. Our project management services ensure works are completed to the required standard, on time, and within budget.

7. Section 18 (1) Valuations

Under Section 18(1) of the Landlord and Tenant Act 1927, a landlord’s claim for dilapidations is capped by the diminution in the value of the property. Our expert valuers undertake Section 18 valuations to assess the property’s value diminution, providing powerful evidence to limit or defend claims.

8. Expert Witness and Litigation Support

In cases where disputes cannot be settled amicably, our experienced surveyors act as expert witnesses in court proceedings, producing independent reports that stand up to scrutiny. We work closely with legal teams to support litigation strategies effectively.

Key Considerations in Managing Dilapidations

Early Planning – Engage a dilapidations specialist well in advance of lease expiry to assess obligations and options.
Lease Documentation – A thorough review of lease terms and alteration agreements is essential to understand responsibilities.
Record Condition – Maintain detailed records of the property’s condition, including photographic schedules of condition, at lease commencement and throughout occupancy.
Budgeting – Forecast potential dilapidations costs early to manage financial exposure.
Negotiation Strategy – Plan for negotiations, considering the timing, evidence, and potential defences such as Section 18 valuations or supersession arguments.

Why Choose Anstey Horne for Dilapidations Consultancy

Experience : Decades of experience acting for both landlords and tenants across a wide range of sectors and property types.

Multi-Disciplinary Expertise : Our team includes chartered building surveyors, valuers, and project managers, ensuring a comprehensive service.

Commercial Focus : We deliver advice that is practical, strategic, and aligned with our clients’ business objectives.

Dispute Resolution Expertise : We have a strong track record of successfully resolving dilapidations disputes through negotiation, mediation, and litigation.

Nationwide Reach : With offices and consultants across the UK, we provide local knowledge with national capability.

Dilapidations for Landlords

Dilapidations for Tenants

Get in Touch

Whether you are a landlord looking to protect your investment or a tenant aiming to manage lease-end liabilities, our dilapidations consultancy team is here to help. We offer tailored advice based on your unique circumstances, ensuring the best possible outcomes.

Contact us today to discuss your dilapidations needs and find out how we can support you at every stage of your commercial property journey.