Taking on a commercial property? Don't take the risk of dilapidations

By Paul Dignan, Lea Hough Chartered Surveyors

Finding the right business premises can be a struggle – especially in the current climate where the supply of commercial property and quality industrial units is limited. So when something suitable comes onto the market, it can be tempting to rush in and snap it up.

However, tenants who do so may come to regret their haste if they later find themselves facing a hefty dilapidations claim.

Three ways to protect yourself as an ingoing tenant are:

1. Have a Pre-Lease Building Assessment Report prepared

This will provide you with an overview of the building’s condition and suitability and will identify immediate liabilities and expenditure required to upgrade the building and ensure that it is suitable to be occupied. It will also orecast likely maintenance and repair works that could be incurred during the proposed term of occupation, and your likely dilapidations obligations at Lease end.

2. Renegotiation of the Lease Terms

If a Pre-Lease Building Assessment Report identifies any large areas of concern, it may be possible to return to the Landlord to renegotiate. This may involve negotiating some aspects out of the Lease, to significantly limit your liability – sometimes saving thousands of pounds of repair bills that you would otherwise have been liable for. Or, it is sometimes possible to arrange for repair works to be completed by the Landlord before you sign the Lease, or even negotiate an incentive such as a rent free period or a reduced rent.

3. Have a Schedule of Condition Report prepared A Schedule of Condition Report will involve a detailed survey of the building and the production of a photographic and descriptive report that records all pre-existing disrepair. Without this, you would otherwise inherit responsibility for repairing pre-existing disrepair, even if the damage already existed before they took occupancy, and would have very little evidence to call upon should you be faced with a dilapidations claim in the future.