Dilapidations

Dilapidations relate to both tenant’s and landlord’s obligations to repair, decorate, reinstate a property or perform legal and regulatory works during, or at the end of a lease.

We develop dilapidations strategies for both landlords and tenants using our knowledge of dilapidations law and current case law. By using an expert to handle effective negotiations, you can ensure your settlement is achieved quickly and efficiently.

Tenants

We’ll minimise the settlement to ensure you’ve got funds for your move to a new premises, or to boost your cash flow.

We also offer dilapidations advice for tenants taking a new lease, which will minimise the liability when you leave the property by providing expert knowledge applied to the building’s current condition and review with your solicitor. If needed we may also prepare a schedule of condition to attach to your lease, which will also limit your repairing obligations.

Our dilapidations assessment service also provides you with a clear indication of your liability during your lease term and a clear strategy as to how to extinguish those obligations to minimise your financial outlay, during and at the end of your lease.

 

Landlords

We’ll maximise your settlement to ensure you’ve got funds to repair, redecorate and reinstate your property and increase its capital value and desirability to new tenants.

Dilapidations is an extensive field or law and is differently applied to each property, but our experts are on hand to guide you through the process, whatever the situation.

 

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What are the most commonly found items of dilapidation?

In a multi-let office building where the tenant only has an internal repairing liability, this generally comes down to replacement of worn carpets, repairing damage to ceilings and redecoration. In a single let building where the tenant is responsible for the whole of the premises then the same items as the multi-let apply but there will be equal emphasis on maintenance of the external fabric and internal building services. Air conditioning/comfort cooling is a particular problem when R22 coolant is used as it is, apart from limited special circumstances, illegal to work on these systems.  As alternative coolants are not as efficient, it is not uncommon for the systems to be removed and replaced at a very high cost. With industrial buildings the most common problems are found with the roofs.  Although asbestos/fibrous cement roofs have generally reached the end of their lives and are difficult to keep watertight, the tenant only has to keep these in repair and there is no obligation to replace with a new roof.  This is often a point of dispute as there are significant costs involved in the repair/recovering of these roofs. Profiled metal sheeting to roofs and walls are prone to cut edge corrosion.  If serious, this can render the roof irreparable and so new sheeting would have to be installed.  There are many products available to prevent this corrosion but it is important that it is addressed early.  This goes back to the “stitch in time” principal and early repair could avoid a costly claim on termination.  Ideally, such treatment should be undertaken at the time of construction but unfortunately this rarely happens. Contact Us

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In a multi-let office building where the tenant only has an internal repairing liability, this generally comes down to replacement of worn carpets, repairing damage to ceilings and redecoration.

In a single let building where the tenant is responsible for the whole of the premises then the same items as the multi-let apply but there will be equal emphasis on maintenance of the external fabric and internal building services.

Air conditioning/comfort cooling is a particular problem when R22 coolant is used as it is, apart from limited special circumstances, illegal to work on these systems.  As alternative coolants are not as efficient, it is not uncommon for the systems to be removed and replaced at a very high cost.

With industrial buildings the most common problems are found with the roofs.  Although asbestos/fibrous cement roofs have generally reached the end of their lives and are difficult to keep watertight, the tenant only has to keep these in repair and there is no obligation to replace with a new roof.  This is often a point of dispute as there are significant costs involved in the repair/recovering of these roofs.

Profiled metal sheeting to roofs and walls are prone to cut edge corrosion.  If serious, this can render the roof irreparable and so new sheeting would have to be installed.  There are many products available to prevent this corrosion but it is important that it is addressed early.  This goes back to the “stitch in time” principal and early repair could avoid a costly claim on termination.  Ideally, such treatment should be undertaken at the time of construction but unfortunately this rarely happens.

Contact Us

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As a tenant, how can I reduce my dilapidations liability?

There are a number of ways of reducing the amount of money you have  to pay to the landlord on termination of the lease.  It can start before you have even taken on the lease.  Unless the property is new there will be parts of it that are already in disrepair.  You should look to have this disrepair recorded in a schedule of condition and write into the lease that you are not required to repair that element.  Commonly this is included in the lease as an obligation not to return the premises in any worse condition but this does not necessarily fully protect you. As a tenant you still need to ensure that it does not get any worse during the term of the tenancy. Maintain the property throughout the lease by undertaking regular maintenance; this will prevent more significant costs at the end. If possible, negotiate with the landlord for a reduced scope of your demise.  Does your demise include external windows and doors and can these be made the responsibility of the landlord?  If the carpet is already worn, can you write in that you will not have to replace the carpets on termination?  Do not attach signage to metal cladding or other sensitive surface as the damage caused by the screw holes will be expensive to repair at a later date.  When attaching anything to the building, think about how the building will be returned to its original condition when those fixings have been removed. Undertake the dilapidations work before the end of the lease.  If work can be done whilst you are still in occupation then you will not have to pay the additional loss of rent if the landlord has to undertake the work after the lease end.  By undertaking the work yourself will also give you more control over costs, you do however carry the risk that if the work is not undertaken to a satisfactory standard the landlord may claim for it to be done. Contact Us

Read More....

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There are a number of ways of reducing the amount of money you have  to pay to the landlord on termination of the lease.  It can start before you have even taken on the lease.  Unless the property is new there will be parts of it that are already in disrepair.  You should look to have this disrepair recorded in a schedule of condition and write into the lease that you are not required to repair that element.  Commonly this is included in the lease as an obligation not to return the premises in any worse condition but this does not necessarily fully protect you. As a tenant you still need to ensure that it does not get any worse during the term of the tenancy.

Maintain the property throughout the lease by undertaking regular maintenance; this will prevent more significant costs at the end.

If possible, negotiate with the landlord for a reduced scope of your demise.  Does your demise include external windows and doors and can these be made the responsibility of the landlord?  If the carpet is already worn, can you write in that you will not have to replace the carpets on termination? 

Do not attach signage to metal cladding or other sensitive surface as the damage caused by the screw holes will be expensive to repair at a later date.  When attaching anything to the building, think about how the building will be returned to its original condition when those fixings have been removed.

Undertake the dilapidations work before the end of the lease.  If work can be done whilst you are still in occupation then you will not have to pay the additional loss of rent if the landlord has to undertake the work after the lease end.  By undertaking the work yourself will also give you more control over costs, you do however carry the risk that if the work is not undertaken to a satisfactory standard the landlord may claim for it to be done.

Contact Us

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Dilapidations - as a tenant, what do I need to know?

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:

Read More....

stdClass Object ( [state] => 1 [modified] => 2017-10-12 09:23:09 [id] => 786 [asset_id] => 1095 [title] => Dilapidations - as a tenant, what do I need to know? [alias] => dilapidations-as-a-tenant-what-do-i-need-to-know [introtext] =>

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:

[fulltext] =>

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.

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Case Study: Newgate Shopping Centre regeneration

We have assisted property developer, McAleer and Rushe with their plans to renovate the Newgate Shopping Centre in Newcastle City Centre. McAleer and Rushe purchased the centre for £18.2million in 2006 and submitted initial plans for the development to Newcastle City Council in 2008. The developers have since revisited the scheme, submitting updated designs to the planners in 2015 and in May 2016, the demolition work began.

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We have assisted property developer, McAleer and Rushe with their plans to renovate the Newgate Shopping Centre in Newcastle City Centre.

McAleer and Rushe purchased the centre for £18.2million in 2006 and submitted initial plans for the development to Newcastle City Council in 2008. The developers have since revisited the scheme, submitting updated designs to the planners in 2015 and in May 2016, the demolition work began.

[fulltext] =>

Once completed, the scheme will include 2000 sq m of commercial space, a 270-bedroom hotel and 575-bedroom student accommodation.

Due to the developments’ central location, there are 64 property owners and tenants in the surrounding buildings. We were appointed by the developers as Party Wall surveyors and generally to deal with all neighbourly matters.

To speed up the process and reduce cost and programme implications we approached the Party Wall process in two stages to encompass both the demolition stage and the construction stage. This allowed the initial demolition of the existing buildings to progress whilst the final construction’s design was developed. By structuring the party wall matters in this way, we ensured that the developer’s risks concerning neighbour disturbances was minimised before works had commenced.

As there was a large number of affected properties and owners/occupiers, we developed a bespoke party wall register to allow the developer to manage and monitor the party wall process in-house. This register has proved so effective in dealing with issues and managing party wall notices that we now use it across all similar party wall cases around the country.

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Case Study: Saving of over £600,000 secured for JLT Group on dilapidations claim

JLT Group is one of the world’s leading providers of insurance, employee benefits and brokerage services.  With headquarters in London and offices in 40 countries, the company provide their services to clients in over 130 countries worldwide.

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JLT Group is one of the world’s leading providers of insurance, employee benefits and brokerage services.  With headquarters in London and offices in 40 countries, the company provide their services to clients in over 130 countries worldwide.

[fulltext] =>

We were appointed by JLT Group to negotiate terms for end of lease dilapidation settlements for five of their office premises in Birmingham, Bristol, Edinburgh, London and Southampton.

The process involved reviewing their initial lease documents, inspecting the five office premises and providing JLT Group with advice on the various options available to them at lease end.

Initially the dilapidations claim received was for circa £950,000 and following negotiations with the landlord surveyors, we managed to secure a 64% saving for JLT Group on the original claim.

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What tenants need to know about dilapidations

Most commercial tenants will encounter dilapidations during or after a lease, as landlords look to restore their properties to the condition they were in when the lease began. Martin Smith, building consultant, explains what dilapidations are and what as a tenant you need to know. "Tenants are often unfamiliar with the process and their responsibilities, including the reversal of alterations made to bars and restaurants, and repair and maintenance of the building itself. "Landlords can therefore recover costs incurred to repair and reinstate the property after the lease period ends. This includes the cost of work required to remove fixtures, fittings and aesthetic touches added by tenants, which can be significant and subsequently reduce the capital tenants can spend on new ventures.

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stdClass Object ( [state] => 1 [modified] => 2017-12-20 15:55:59 [id] => 1098 [asset_id] => 1409 [title] => What tenants need to know about dilapidations [alias] => what-tenants-need-to-know-about-dilapidations [introtext] =>

Most commercial tenants will encounter dilapidations during or after a lease, as landlords look to restore their properties to the condition they were in when the lease began. Martin Smith, building consultant, explains what dilapidations are and what as a tenant you need to know.

"Tenants are often unfamiliar with the process and their responsibilities, including the reversal of alterations made to bars and restaurants, and repair and maintenance of the building itself.

"Landlords can therefore recover costs incurred to repair and reinstate the property after the lease period ends. This includes the cost of work required to remove fixtures, fittings and aesthetic touches added by tenants, which can be significant and subsequently reduce the capital tenants can spend on new ventures.

[fulltext] =>

"The introduction of the new RICS dilapidations guidance in December 2016 aims to improve the way dilapidations are handled. It outlines detailed responsibilities for both tenants’ and landlords’ surveyors to make the process fairer and quicker and can therefore be useful for both parties.

"Landlords must prove any work forming part of the claim has actually been carried out. If not, a diminution valuation, under s18(1) Landlord & Tenant Act 1927, can be used to prove the loss in capital value of the property and defines the maximum value of any landlord’s claim.

"In both situations, full consideration of the cost of works and the diminution value will show any fair and tangible loss suffered and facilitate a smoother process at the end of a tenancy, for both landlords and tenants.

"Tenants should ensure they are aware of their responsibilities regarding obligations for reinstatement following alterations, together with general repair and maintenance obligations, before signing any lease agreement.

"During a lease term, liability can also be established by a chartered surveyor, who can provide advice on anticipated dilapidations liability and what limitations might apply to the landlord’s claim under s18(1)."

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Martin Smith, building consultant, explains what dilapidations are and what as a tenant you need to know. 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