What are dilapidations?
When renting commercial space, it is important for lease holders to consider the potential dilapidations liability at the end of their contract. Dilapidations are when a tenant does not repair or maintain premises in accordance with contractual agreement and this can result in costly repairs due from them upon vacating.
It is essential that both tenants and landlords carefully review any repairing clauses before signing a rental agreement as these will influence financial liabilities even at the end of tenancy.
Here are some considerations when entering into a lease agreement:
- length of lease being agreed.
- Is it a new lease or are you taking on a lease from another party? Or extending an existing lease?
- Extent of the repairs obligations. Will you be responsible for the external part the property or just internal areas? Who will repair roof leaks and defects? Are you responsible for decorating at the end of the lease?
- Ask if the lease has a Photographic Schedule of Condition. This will limit the tenant’s obligations of repairing the property to the same condition as shown in the photo schedule rather than to as new.
- Are any fit out & improvements made by the tenant to be removed at lease end?
Case study: industrial lease end dilapidation project at Witney.
We carried out external cladding spraying to 3 industrial units at Witney in 2022.
The units were given a modern grey colour scheme, including on site spraying of doors, windows and shutters.
Guide to Dilapidations
Dilapidations are an integral part of tenancy law. When landlords seek to make dilapidation claims against tenants, they typically compile a Schedule of Dilapidations. This document usually outlines the obligations made by tenant, in terms of alterations to the property or its reinstatement, redecoration and repair. In some cases, dilapidation claims can amount to more than 12 months’ rent. As dilapidation claims may involve complex matters that are difficult to navigate alone, it is always advised to seek guidance from your surveyor and solicitor. Furthermore, nuances in lease clauses can have a great bearing on your liabilities; hence ensuring you understand them will be beneficial in the long run.
When you start looking at a new property, dilapidations should be at the forefront of your mind before signing on the dotted line. Subtleties in lease clause wording can have serious implications. Ensure you know exactly what you are taking on and who is responsible for looking after different areas of the property throughout the duration of the lease. A Schedule of Condition can limit any liability if something goes wrong, as well as providing you with an honest assessment of the condition of a property from the start so expectations are clear. Once you’ve chosen a property, keep meticulous records related to your lease process to avoid any disputes at its end. Good maintenance and proper facilities management further help in keeping dilapidations at bay during your time there.
When dealing with dilapidations for a leased property, it’s important to consult a dilapidations surveyor experienced in dilapidation management at the first sign of any issue. A dilapidations surveyor will assist you in inspecting the premises and preparing an itemised response to the landlord’s claim, as well as suggesting strategies for efficiently managing dilapidations. Using their expertise of the lease, they can create technical rebuttals to reduce or even deny unfair dilapidation claims by landlords. Additionally, should negotiations with your landlord hit a stalemate, a building surveyor is able to provide advice on other solutions that are viable depending on the situation and your preferences. In short, acting promptly on dilapidation issues and consulting an experienced building surveyor could be invaluable to you if faced with dilapidations problems.
The lease end process
Leases are a legally binding way for landlords to protect their property. At the end of a lease, any issues or obligations between landlord and tenant come to an end – except in cases where there have been breaches of said contract. It is typical however that a Schedule of Dilapidations will be served by either party detailing repairs which needed during, as well as after the term ends; this document should always made with professional guidance from both legal advisors and surveyors in order ensure complete accuracy regarding repair responsibilities under such contracts.
The options at lease end:
- Tenant completes dilapidation works at their expense
- Landlord completes the works at the tenants expense
- The tenant pays the landlord to cover the cost of putting the property back to original condition.
Tenants can take proactive steps to insulate themselves from the hefty liabilities that come at the end of a lease. When negotiating a new lease, particularly for short leases, insist on having the repairing liability restricted to ensuring any damage done is no worse than when you moved in. Be aware however; some repair terms include renewals such as replacing an aged roof- so be sure get yourself a Chartered Building Surveyor who will check for defects put together and record all pre-existing items of disrepair through forming a Schedule of Condition.
When taking over from an existing tenant it is important to consider any alterations made and the cost to return the premises to original condition.
We can help minimise your cost to complete dilapidation works, typically saving clients 40% compared to handing back the property without completing any dilapidation works.
Our team ensure all sensitive areas are masked and protected from paint spray.
Our Dilapidation services
- Roofing repairs
- Building works
- Removal & replacement of stud walls
- Suspended ceiling removal
- Spraying of windows & doors
- Mezzanine floor removal
- Plastering, rendering and brickwork
- Complete factory painting
- UPVC window and door fitting
- Asbestos removal
- Complete roof replacements
- Kitchen and bathroom refitting
- Landscaping, tarmac & car park markings
- Decoration work
- Carpet & vinyl flooring
- Roof coatings- Sharmans Delcote
- Rubbish clearance
- Cladding spraying
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Frequently asked questions
At the end of a lease, tenants are given a bill of dilapidations – charges associated with returning the property to its original condition. These costs involve repairs & restoring any cosmetic changes made during tenancy, ie removing mezzanine flooring, stud walls and alarms.
It is usually more cost effective to get any dilapidations works carried out in advance of handing back the property. You can get multiple quotes to ensure exit costs are kept to a minimum.
If you obtained a schedule of condition before starting a lease this will limit the amount of repairs you are liable for.
A full repairing lease is common and means the tenant is responsible for repair costs, upkeep of the property and cost of building insurance.
- Ensure to consider repair obligations when negotiating the terms of a lease.
- Prepare a schedule of condition for the property.
- Keep on top of the repairs rather than let it slip into disrepair.
- Think before making alterations as these will need to be removed when leaving.