It pays to have an expert on your side

Dilapidations can be a contentious and complex issue for commercial property Landlords and Tenants.

Claims are costly and outcomes can be severe. In some cases claims can be equal to, or greater, than a company’s profit over the duration of the lease.

If you are a Landlord, a poorly executed dilapidations claim could leave a large financial gap between the settlement achieved and the cost of returning the property to a tenantable condition. When this occurs, it can result in the ongoing depreciation of the property’s condition and consequently, its value.

Finding the right solutions

Although dilapidation claims are a long standing part of English Law and commercial property leases, many Tenants do not understand the true nature of their dilapidations liability.

In many cases, if Landlords don’t communicate with Tenants in preparation for the claim, then the process becomes costly and potentially damaging to both parties.

Therefore it is in everyone’s best interest for the process to be understood and professionally managed long before the lease expiry date.

At Robertson Simpson, we represent Landlords and Tenants both separately and together. We often represent both parties and help them to reach an amicable position.

Commercial landlord’s guide to Dilapidations

What is a dilapidations claim?

  • Dilapidations deals with the Tenants repair, decoration, reinstatement & statutory obligations within leases.
  • Dilapidations become an issue for a Tenant at lease expiry or when exercising an option to break a lease (and occasionally during a lease) where there is a breach of the repair, decoration, reinstatement, or statutory covenants.
  • We therefore provide advice to clients on how best to deal with dilapidation claims.

Commercial tenant’s guide to Dilapidations

How likely am I to experience a claim?

  • Almost all commercial Tenants will have a dilapidations liability from day one of a lease.
  • Your accountants should be accruing for this in your accounts in accordance with UK accounting standards.
  • Although you may not be aware of it, it may be part of your Landlords budgeted income for the property.

Key questions for Landlords

Do you know that under a lease a Tenant is usually required to undertake repair, reinstatement, statutory compliance, and decoration works?
Are you aware that the responsibility for fulfilling these obligations exist throughout the term of the lease, not just at lease expiry?
Are you ensuring that the Tenant is maintaining the demised premise correctly and in accordance with their lease obligations?
Is your property in need of urgent repair, and is the current condition affecting its capital value?
Are fees for a surveyor acting on your behalf the responsibility of the Tenant?
Do you need a Repair Notice or an Interim or Terminal Schedule of Dilapidations preparing?

Key questions for Tenants

Do you fully understand what dilapidations are?
Are you expecting a bill for dilapidations at end of your current lease?
Are you accounting for dilapidations as per UK accountancy standards?
Do you fully understand the obligations and liabilities under the terms of your lease regarding repair, reinstatement, decorations and statutory compliance?
Do you have a lease break, or are you looking to exercise a break?
Are you in the last two years of your lease?
Are you looking to repair, alter or improve your property?
Do you need to negotiate a Landlord’s Interim or Terminal Schedule of Dilapidations?

Our clients