Dilapidations: Something for everyone

A breach of repairing obligations in a lease gives rise to dilapidations, but the pain can be reduced.

Jonathan ShawBy Jonathan Shaw, partner, Anderton Gables.
Disputes are rife, with over-zealous landlords’ claims and tenants not fully aware of what they have signed up to.
As a landlord you will want to preserve the value of your asset, whether that means enforcing the tenant’s obligation to hand back the premises in a good state of repair or by way of a payment in lieu.

Tenants usually have a short term interest in the premises and do not want to spend any more than they have to.

However, both parties can reduce the risk of drawn-out and miserable disputes with some easy steps:

Landlords

  • Get the lease drafted to suit you and to suit the building. For example, if you want replacement carpets at the lease end, say so.
  • Rather than wait until the lease end, consider serving an interim schedule during the term if you are concerned about the tenant’s neglect of the building causing deterioration to your asset value.
Tenants
  • Get good pre-lease advice from a Chartered Building Surveyor and negotiate onerous aspects out of the lease. Agree a rent-free period that covers the cost of the works or that the landlord does these works prior to the lease commencement.
  • Reduce your liability by reference to a Schedule of Condition stating you will not return the premises in any better condition at lease end than when you took it.
  • Plan your exit to minimise the risk of dilapidations disputes and possibly loss of rent claims if a landlord has to undertake the works post lease.
Our dilapidations team provide commercially aware advice to get you the best outcome. And remember, if you do not appoint somebody savvy, maybe the other party will, and that could leave you out of pocket.