As a tenant, you may be able to challenge the landlord’s list of required repair work (referred to as a schedule of dilapidations). To be in a strong position to mount a challenge, you need to consider the dilapidations question right at the outset, with the help of your building surveyor, before you sign a lease.
What are dilapidations?
The term covers defects and disrepair which you, as tenant, will be required to fix or pay to have remedied when you vacate the premises that you have leased.
When do I need to start thinking about dilapidations?
Before you take a lease – a survey will establish the condition of the premises, giving an indication of the work that may be needed (both immediately and later). It is usually a good idea to record the condition and layout of the premises before you occupy. If the premises is already in bad repair, special considerations apply (see below).
During the term of the lease, regular or planned maintenance can avoid large expenses later.
What if the premises are in a poor state at the outset?
Most commercial leases require the tenant to put and keep the property in repair. Unless you and the landlord agree otherwise, the fact that the premises were in a poor condition when you took them on is largely irrelevant. You still have to put them right, so negotiate for a lower premium or a lower rent to compensate for costs that you face.
Alternatively, persuade the landlord to agree that the premises be returned at the end of the lease in a condition similar to the state in which you took them. In this case, after the premises are surveyed, make sure that the condition is established, recorded and attached to the lease as a ‘schedule of condition’. Ensure that your solicitor varies the lease clauses to reflect the reduced obligations.
When is the landlord likely to submit a dilapidations claim?
Generally speaking, landlords do not serve dilapidations claims earlier than three years before the end of the lease. If you, as tenant, have a statutory right to a new lease, the landlord probably will not serve a dilapidations claim unless or until you indicate that you are unlikely to renew your lease.
What is the position on alterations I have made?
This depends on the terms of the lease and any licences that the landlord granted you to make alterations. On granting consent for alterations the landlord probably required that at the end of the lease you restore the property to its original state if requested to do so.
Therefore, unless the landlord thinks your alterations have added value, you will probably be required to reinstate the property at the end of the lease or pay the cost. The exception is if neither the lease nor the licence for alterations gives the landlord the option of requesting reinstatement.
Do I have to accept the landlord’s dilapidations claim in full?
No, do not accept it without taking professional advice. We may be able to reduce the figures and/or demonstrate that certain items should not have been claimed and if we can’t then we will not charge. The landlord may not in fact intend to repair the property; they might plan to demolish or alter it. In these circumstances you would have a good defence in law to the claim because landlords should not claim for more than they have actually lost.
What if I cannot reach a compromise with the landlord?
If you cannot reach agreement, the landlord has recourse to the court, but this is a slow process and expensive for both sides. Landlords and tenants will generally avoid it if they can. In a court hearing we may be able to act as an expert witness on your behalf, but a court hearing is expensive for both parties, and therefore we try to avoid it where we can.
Alternatively, disputes can be resolved by mediation, expert determination or arbitration.
