What are Dilapidations?
Dilapidations refer to the legal and financial obligations or responsibilities that a tenant may have towards the maintenance and repair of a rented or leased property during the tenancy and upon its termination.
These obligations are typically outlined in the lease agreement between the landlord and the tenant.
What are Dilapidations – Key Points
Here are some key points to understand about dilapidations :
Lease Terms: The lease agreement will specify the condition in which the property should be maintained during the tenancy. It may include provisions regarding repairs, redecoration, and general upkeep of the property.
Tenant’s Responsibilities: Tenants are generally responsible for keeping the property in good repair and condition throughout the lease term. This includes fixing any damage or wear and tear that occurs during their occupancy.
Interim Inspections : Landlords may carry out interim inspections and issue interim dilapidation notices. They will do this if they believe that the tenant is not properly maintaining the property. These notices typically request the tenant to make necessary repairs and improvements.
Terminal Dilapidations: When the lease comes to an end, the landlord may conduct a final inspection of the property. If there are any breaches of the repair and maintenance obligations, the landlord will issue a terminal dilapidations claim. This will specify the required remedial works and the associated costs.
Settlement or Negotiation: Once a terminal claim is issued, the tenant and landlord can enter into negotiations to settle. This may involve discussions about the extent of repairs required and the associated costs. For more information see the Government’s pre-action protocol on negotiation.
Schedules of Dilapidations : These are documents prepared by either the landlord or a surveyor detailing the required repairs and estimated costs. They are an important part of the process to negotiate any claim.
Financial Implications : Dilapidations can have significant financial implications for tenants. They may be required to pay for the cost of repairs, redecoration, or compensation to the landlord if they fail to meet their obligations.
What are Dilapidations – Managing Liability
It’s essential for both tenants and landlords to understand their rights and responsibilities regarding dilapidations. They can have a substantial impact on the cost of leasing commercial or residential properties in the UK.
Towards the end of a lease, or if a break clause is being operated, it is prudent to appoint a urveyor at least six months prior to the termination, who can advise what the best course of action should be.
While tenants still have possession, they are in a good position. They can either choose to do the dilapidations works (repairs, redecoration and reinstatement) under their own volition following a dilapidations assessment by a surveyor, or begin negotiations with the landlord’s surveyor, following receipt of their ‘terminal schedule’ of dilapidations.
Tenants should not wait for lease expiry (or a ‘final schedule of dilapidations’) and leave the dilapidations claim to be negotiated between surveyors. At this point they will have lost possession and the opportunity to control the costs of the work.
A tenant’s dilapidations surveyor should always ask the landlord what their intentions are following lease expiry.
If it can be proved that the ‘use’ or demise will change on completion, such as from offices to residential accommodation, then the dilapidations claim will be significantly reduced or in some cases, wiped out.
Surveyors will also look for other ‘supersession’ to limit any claim. They can also advise on obtaining a ‘diminution valuation’ as a useful tool which can provide a cap on the liability.
Our expert team have extensive experience of dealing with all dilapidations matters. We act for both landlords and tenants, ensuring a global approach to the dilapidations process.
For more information on managing your repairing and lease obligations see our recent article.
We assist commercial landlords and tenants on all aspects of lease obligations, repair and dilapidations. We provide specialist surveys, new lease schedules of condition and general dilapidations advice.
Link: Contact Us
Team members shown:
- Theo Channer
- Alexa Cotterell
- Simon Hill
- Mark Crowley