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‘Dilapidations’ is a specific area of law relating to breaches of a tenant’s lease obligations or covenants.

A claim due to dilapidations can be made against a tenant by the landlord during or towards the end of a lease, or even after the lease has ended. The landlord’s claim is made by means of a document usually referred to as a ‘Schedule of Dilapidations’ which will contain references to any breaches of the tenant’s specific obligations within the lease. These mainly relate to a failure to comply in terms of maintaining the building, carrying out repair and redecoration as required by the lease, or issues relating to physical alterations which may have been carried out whilst in occupation (which may require written approval to proceed) and the need for reinstatement.

The amount claimed can often be considerable if the property has not been maintained or if unauthorised alterations have been carried out. Whether you are a landlord seeking to prepare a claim, or a tenant who requires clarification regarding your lease obligations, we can help you navigate the process.

Tenants should consider:

Before signing a lease

You should familiarise yourself with the terms of the lease before signing the contract. We can provide a Photographic Schedule of Condition to record the condition of the premises at commencement, which can be appended to the lease, potentially limiting the repairing liability.

During the lease term

Consider the potential dilapidations liability during the term of your lease and budget for it. If you carry out alteration works to the premises, it is likely that your landlord may require you to reinstate those alterations before the lease ends.

Near the end of the lease

Consider the extent of dilapidations work you have committed to complete, including any reinstatement works. It would be helpful at this point to engage a Chartered Building Surveyor who is experienced in dilapidations to advise you.

If works are required then you should expect to receive a Schedule of Dilapidations from your landlord.

If dilapidations works are not complete before the end of the lease term, your landlord can claim damages from you which may include additional costs such as loss of rent and service charge. It may also include an allowance for irrecoverable VAT. This claim is called a ‘Quantified Demand’.

After you have responded to any claim (based on advice from your surveyor), you would look to negotiate a settlement with the landlord via your appointed surveyor in order to avoid potential litigation.

Landlords should consider:

Serving notices on your tenant before the end of the lease so that they reinstate alterations made to the property during occupation. Following this, you should issue a Schedule of Dilapidations and a Quantified Demand within 56 days after the end of the lease term.

It is normal to engage a Chartered Building Surveyor to prepare a Schedule of Dilapidations on your behalf.

The Schedule of Dilapidations will include the reasonable cost of works that the tenant should have carried out, and this is likely to be the main guide to the amount of compensation sought. However, the law does not allow this to exceed the amount by which the property has been devalued by the tenant’s breaches at the end of the lease.

Normally, your surveyor and the tenant’s surveyor will meet to negotiate a settlement. If a settlement is not possible, you may be faced with potential litigation with your former tenant, although the Dilapidations Protocol states that parties should consider alternative dispute resolution (ADR) before going through the courts.

For more information about dilapidations or to discuss your lease or tenant’s lease, please contact David Cook.