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Dilapidations – The Covid Effect
After having been in the midst of a Covid-19 Pandemic for over a year, we have begun to see an impact on dilapidations in relation to commercial properties over recent months.
This blog details some of the dilapidations trends that we are seeing for our clients in Lancashire, Cumbria and Yorkshire.
When Covid first hit, we expected activity in the commercial market to arise fairly swiftly. In actual fact, the dilapidations scenarios didn’t play out quite as quickly as we had anticipated. Nevertheless, we have seen a definite rise in dilapidations instructions over the past 3-4 months.
We have been appointed in a number of scenarios where we are advising outgoing Tenants on exit strategies. We have also been appointed by Landlords where their Tenants have given notice to vacate or decided not to renew the Lease, and we are seeing instances where Covid is prompting Landlords to pursue Interim Dilapidations claims.
Some examples of recent dilapidations instructions are as follows:-
- Retail premises in Clitheroe, Lancashire – we have prepared a Schedule of Dilapidations on behalf of the Landlord after their longstanding Tenant has decided to vacate. It is a large traditional retail shop on a high street in Clitheroe, Ribble Valley, but after many years of trading at the premises, the Tenant has decided to vacate. Following issue of the Terminal Schedule of Dilapidations, the Tenant is currently removing alterations and fit-out works, and will be undertaking repair and redecoration works prior to the end of the term.
- Office building in Preston, Lancashire – on behalf of our PLC client, we are advising them on an exit strategy. It is a large multi-storey office building that was, until 12 months ago, fully occupied, but with the company now operating a work from home policy, they have decided that they will not be renewing the Lease. The Tenant has served notice to terminate and we are advising the Tenant on their obligations and next steps. We anticipate helping the Tenant to defend a Schedule of Dilapidations that will soon be served upon them by the Landlord. This particular Tenant has additional office premises elsewhere and they intend to adapt and redevelop their other office buildings so that they are capable of accommodating flexible working and hot desking etc., So they will save the outgoings on the rental income and Business Rates by handing the Preston building back to the Landlord.
- Café in Lancaster – we acted for a Landlord after the Tenant decided to vacate. We prepared a Schedule of Dilapidations, on the basis of which the Tenant has undertaken much of the dilapidations works. There are elements of work which either the Tenant has not completed or has not completed to an acceptable standard, so we are advising the Landlord on further recourse. The Landlord has already managed to re-let the property to a new Tenant.
- Manufacturing premises in Yorkshire – we are advising a commercial company who are preparing to exit the premises when the Lease comes to an end soon. The Lease will not terminate for several months, but we have undertaken surveys and provided a Scope of Work. The Tenant is following the guidance and is carrying out dilapidations/yielding-up works in accordance with our directions, so that they can hand the building back to the Landlord, or agree a financial settlement closer to the time once they’ve obtained prices from contractors.
- Office building in Blackburn – we are acting for a Landlord who has decided to prepare an Interim Schedule of Dilapidations and serve it upon the Tenant. The Tenant still has 3 years remaining on the Lease, but, now that Covid-19 has brought such matters to the fore, the Landlord has sensibly appointed us to prepare a Schedule of Dilapidations and then he can arrange for the building to be put into a state of repair, at this interim stage of the Lease, just in case the Tenant was to ever get into financial difficulties and default prior to the end of the Lease.
As can be seen, there is certainly activity in the commercial property market in the North West. Much of this activity has been generated due to the implications of Coronavirus and we expect this trend to continue.
If we can assist with any Terminal Schedules of Dilapidations on behalf of Landlords, Interim Schedules of Dilapidations on behalf of Landlords, or assist Tenants who have received a Schedule of Dilapidations, or assist Tenants to plan in advance with an exit strategy prior to serving notice to quit on a commercial property, we will be delighted to assist. Please contact one of our Commercial Building Surveyors for more details.BACK TO NEWS