As leading commercial property estate agents, we understand the commercial property market, and all the costs and responsibilities it involves, to deliver the support and advice the landlords and tenants we represent need. Our commercial property estate agents want our clients to have a clear understanding of the market at every stage to ensure all parties can make the most out of their commercial assets for the short and long term.
Dilapidations are common costs associated with commercial property rental. Commonly incurred at the end of a commercial lease, these costs are crucial for restoring the property back to its original or pre-let condition. So what are dilapidations, when should landlords start the conversation about dilapidations with their tenants, and where do tenants stand when it comes to footing the bill? In this blog post, our commercial property estate agents answer these key questions.
An introduction to dilapidations
Dilapidations are essentially exit costs that are incurred by the tenant at the end of their commercial lease. Dilapidations are based on what it will cost for the property to be restored, either back it its original state or its pre-let condition.Â
The costs and terms of dilapidations will be relayed to the tenant via a ‘schedule of dilapidations’, a legal document devised by the landlord relaying the clauses originally agreed to by the tenant in the commercial lease. Only when a schedule of dilapidations is completed and submitted to the tenant can a formal dilapidations claim be made.
What should a schedule of dilapidations include?
As well as providing a general description of the clauses of the commercial lease, a schedule of dilapidations will detail specific repairs, décor changes, alterations and reinstatements to be carried out before the property is returned to the landlord and the commercial property estate agents representing them. This can include anything from minor repairs (such as filling holes) to bigger jobs like repainting or refurbishment.Â
The schedule of dilapidations will also state projected costs for the works from surveyors instructed and approved by the landlord.
I’ve received a schedule of dilapidations, what should I do next?
Whilst the total cost of dilapidations may be high in the first instance, it may not be the figure you have to pay at the end of your lease term. Our commercial property estate agents recommend working with a solicitor and your own, independent surveyor to assess the provided schedule of dilapidations and the repairs listed.Â
Some of the items listed may not be yours to correct whilst select costs may be higher than the industry average. Your surveyor will have the knowledge to identify the latter, and your solicitor will then be able dispute these to establish grounds for renegotiation and a more accurate schedule of dilapidations. There is a statutory limit for dilapidations claims. This is calculated using the value of the property and its reduction due to the presence of dilapidations.
The schedule of condition devised before you signed your commercial lease can also be revisited at this stage. The schedule of condition is a vital supporting document and will ensure that the landlord’s initial description of the property’s condition corresponds with the schedule of dilapidations.
Seeking professional assistance from a reputable solicitor and the experienced surveyors that form part of our commercial property estate agents sooner rather than later is advisable.
How soon should a schedule of dilapidations be devised?
When it comes to the schedule of dilapidations, being prepared is the key for both landlords and tenants.Â
For landlords, appointing a surveyor and beginning work on the schedule should start at least six months before the end of the tenant’s lease term. This will ensure a reasonable amount of time can be dedicated to making an appropriate assessment before it can be served to your tenant. Tenants should be advised in plenty of time to give them the opportunity to limit their liability before the dilapidations process gets underway and their lease ends.
Tenants should also prepare in advance for dilapidations, setting aside a budget for the reinstatement and/or removal of any fixtures and fittings that have been altered or added during their tenancy.
Need an expert insight into the dilapidations process?
Our commercial property estate agents can help! Our surveyors are ready and waiting to assist you with dilapidations, giving landlords ultimate peace of mind as their tenants’ commercial leases come to an end.Â
Our commercial property estate agents are experts in dilapidations and schedules of condition. All of our chartered surveyors are governed and regulated by strict rules of conduct as set by the Royal Institute of Chartered Surveyors (RICS). We use the Property Litigation Association (PLA) Dilapidations Protocol as a framework to assist landlords, prevent unwelcome surprises for tenants, and minimise disputes when dealing with dilapidated commercial buildings.
For further information about our dilapidations service, please contact our commercial property estate agents today.
