As a leaseholder of a commercial property, you will at some point be required to deal with the issue of dilapidations. Chris Eglin from our Building Consultancy department explains what dilapidations are and what as a tenant you need to know:
What are dilapidations?
Dilapidations are the difference in the condition of a property during its occupancy, or when a lease ends, compared with the condition it should have been in if maintained in accordance with the lease.
The condition that you have to maintain and return a property in will have been set out in the initial lease agreement with your landlord. If as a tenant you do not keep to this agreement, the landlord has the right to charge you for any subsequent reinstatement costs.
As a tenant, what do I need to know?
Before signing a lease agreement, make sure that you are aware of your responsibilities, regarding the repair and general maintenance of a property.
During a lease you need to bear in mind that any alterations made to a property may incur a dilapidations liability in the future, to reinstate a property to its original unaltered state.
Towards the end of a lease, it is important that you stay on top of any dilapidations work you are required to complete. If you do not complete the required dilapidations work then your landlord may issue a dilapidations claim, to recover their costs for undertaking the work required to return a property to the condition set out in the lease.
I have received a schedule of dilapidations, what should I do?
Unless you have completed all the building work set out in the lease and any work to remove alterations, you would expect to receive a schedule of dilapidations from your landlord.
A schedule of dilapidations is the document prepared by the landlord, or on his behalf by a surveyor, that lists outstanding repairs, reinstatement and decoration requirements to the property, often with an estimate of the final cost of the work.
You will be expected to respond to the schedule of dilapidations within 56 days of receiving it. Once your response has been sent, it is normal for your surveyor to meet with your landlord’s surveyor in an attempt to reach a settlement figure that is agreeable for both parties.