Our Building Surveying Team has seen significant activity in Dilapidations appointments in 2022, having been appointed to act for both Landlords and Tenants in respect of Lease related repair claims and disputes. Here we look at some of the general trends we are seeing, also looking at some specific examples of dilapidations claims.
Dilapidations Trends
Several of the recent dilapidations instructions we have worked on relate to strategic moves by Landlords to place pressure on Tenants, with a number of Interim Schedules of Dilapidations being undertaken. We have noticed more Interim Schedules of Dilapidations being requested by Landlords than in previous years – perhaps it is a sign of the times that Landlords are keen to put pressure on Tenants during the term to keep buildings in a good standard of repair. Another possible driver is landlords looking to recover some ground post-Covid; wanting to get their businesses in order, looking to increase rental income wherever possible, as well as ensuring that Tenants keep commercial properties shipshape.
Similarly, we have been appointed by Tenants to defend various interesting Dilapidations claims that have been served upon them, and we are working with Tenants in respect of defence and strategies in relation to early surrender and general tactical advice when responding to Dilapidations claims that have been received.
There are also other situations where properties are changing hands that is leading to an increase in Dilapidations scenarios. These include Tenants vacating properties, Landlords re-organising and Company sales taking place, all of which may give rise to dilapidations.
Examples of Recent Dilapidations Instructions
- Large manufacturing premises in Yorkshire – an existing Tenant is nearing the end of a Lease, and will be transferring the Lease to a sister company (with consent from the Landlord). We are impartially assessing Dilapidations between the two Tenant firms.
- Vacant commercial property near Skipton – the Landlord has offered for the Tenant to exit the Lease in exchange for a financial settlement, comprising the remainder of rent due, plus Dilapidations works. We are working with the outgoing Tenant, reviewing the Landlord’s Schedule to aid negotiations and reduce the size of the early surrender/settlement figure.
- Commercial property in Darwen – early surrender of lease. We are acting for the Landlord, who is negotiating a settlement with an outgoing Tenant, which will include an amount of money for rent, plus Dilapidations assessment.
- Shop in North Lancashire – we are acting for the Landlord. The Tenant is looking to stay in occupation, and put a new Lease in place. However, the Tenant has allowed the property to fall into disrepair and the Landlord has commissioned a Schedule of Dilapidations, to ensure that the Tenant carries out all required works in conjunction with the Lease renewal.
- Office premises in Blackburn – the Landlord has instructed us to prepare an Interim Schedule of Dilapidations, which will be served upon the Tenant to ensure that the Tenant carries out the repairs two years prior to the end of the Lease, instead of allowing the standard of repair to deteriorate for a further two years.
- Tourist building in Morecambe – we are acting for a Tenant who is undecided with regard to whether or not to renew the Lease, which will come to an end in 1-2 years’ time. We have prepared a Dilapidations Assessment, so that the Tenant can budget or factor the likely cost of Dilapidations into their decision making process.
- Café/Shop in Lancaster – acting on behalf of the Landlord, we have prepared a Terminal Schedule of Dilapidations, for service upon the Tenant.
- Office building in Barrow in Furness, Cumbria – Dilapidations Assessment Report to help the exiting Tenant with their budgeting and strategy.
- Office building in Preston, Lancashire – Dilapidations advice for the outgoing Tenant. We achieved a financial settlement with the landlord instead of the tenant undertaking repair works.
As this blog demonstrates, there are a number of different scenarios that can develop in relation to Dilapidations. In all cases, Landlords and Tenants require strategic advice from savvy Building Surveyors who are familiar with commercial Dilapidations processes, case law and likely defences.
Coupled with this, our Valuation Surveyors are also providing advice regarding rental levels in relation to Lease renewals.
If you are a Landlord or a Tenant of a commercial property and require Dilapidations advice, please contact us for assistance.
