Dilapidations

Dilapidations is a fundamental element of the commercial tenancy process, and it is essential that both owners and occupiers are aware of their obligations throughout the lease cycle, to ensure buildings are maintained and to limit the chances of a dispute arising at the end of a term.

It is essentially a claim for damages that a landlord makes if breaches of the lease terms are committed.

The claim can be made during (interim dilapidations) or at the end of the term (terminal dilapidations).

How dilapidations occur

Traditionally, the landlord has the right to make a dilapidation claim, where breaches of the repairing, decorating, reinstatement, and statute clauses are identified.

Midterm claims are often served with a repairs notice requiring the tenant to undertake the works within a specified time frame. An end of term claim will include estimated costs to cover the works required and form the basis of a monetary settlement.

As a landlord, you will want to preserve the value of your asset and be compensated for any losses that you incur because of your tenant’s failure to comply with their lease obligations.

As a tenant, you will need advice on the validity and quantum of your landlord’s claim, as well as any statutory protection. In either situation, you need an experienced building surveyor with knowledge of the legislation, procedures, remedial work options and costs.

Factors that influence dilapidations

There are many factors which can affect dilapidations that may have a significant impact on the respective party’s liability or recoverability, including:

Section 18(1) Landlord and Tenant Act, 1927 places a statute cap on the level of damages a landlord can make.
The minimum Energy Efficient Standards (MEES) makes it unlawful for landlords to let a property with an F or G rated EPC (Energy Performance Certificate), without firstly undertaking improvement works. The requirement for improving a building in line with MEES will encourage landlords to consider what works they can undertake as a cost to the tenant and those works that render valueless elements of a dilapidations claim.
A landlord’s future use of the building including demolition or change of use.

Whether you are a landlord or a tenant, commercial Dilapidations are all about timing and preparation.

At Hagen we have the skill to advise you on all commercial dilapidation matters in a proportionate and realistic manner. As trained negotiators we can manage or defend a claim to ensure resolution is met in the most efficient and cost-effective way.

For further guidance and to discuss your current needs, please email services@hagen.org.uk or phone Philip White on 07747 800116