Today, in our instalment of our Property Surveying blog, we are going to be taking a deep dive into dilapidations.
To put this blog into context, dilapidations are the repairs, reinstatement and remedies that are required to a commercial property at the end of a tenancy.
Unlike a residential lease, whereby the tenant will not be expected to decorate or yield up the property upon termination of the lease. A commercial lease will require that the tenant presents the property back to their landlord in a condition and state of repair that is no lesser than that when the tenant originally took occupation at the start of their contract term.
In practice, this will mean that the tenant needs to remove any alterations or decorations that they have installed within the commercial premises.
Typically, tenants are going to want to have the commercial space in a presentable format that can often meet their own credentials, as well as trading requirements.
Typical examples of how tenants will adjust and alter commercial premises, in our opinion here at Stokement, are as follows:
Typical Dilapidations
- Installation of office partitions
- Installation of shop fit-outs
- Installation of air-purification or air-conditioning systems
- Installation of signage and shopfront decorations
- Installation of CCTV, intruder alarm or other forms of data entry systems
All of these are going to provide the tenant will immediate benefit, however, realistically will not offer the landlord any type of long-term benefit, it is therefore and reasonably expected for the landlord to request the tenant to remove these installations and present the property back to them in its pre-installed state.
Furthermore, the tenant is going to find themselves liable for disrepair and defect that was suffered to the property.
One of the key considerations that commercial tenants often overlook, is the requirement for the tenant to often keep both internal and external parts of the property in a good state of repair.
Dilapidations will therefore cover internal and external parts of the property, and by ensuring that the landlord does not need to go through hefty and substantial making good and repair at the end of the tenant’s lease. Instead, they are able to simply market the property for rent and lease for the next tenant.
What to expect during the survey
During the dilapidations survey, the building surveyor is going to methodically and carefully work their way through the property, usually in a top-down manner.
The surveyor is going to be assessing all of the issues that they have been able to locate at the property, carefully itemising these, setting out the issue and what needs to be done to rectify.
The inspection will cover all areas of the demise that the tenant has a contractual liability, and as confirmed above, this can often include standard parts, courtyards, parking areas, plant rooms, etc.
What does a dilapidations report look like?
Once the surveyor has fully assessed the on site condition of the property, carefully setting out all of the findings, they are then going to proceed back to the office and tabulate and formulate a report that will clearly set out all of the tenant’s breaches, while also providing the landlord with a cost estimation as to what the making good of the repair will require in financial terms.
Elements such as loss of rent during the course of the redecorations will be considered, furthermore any professional fees that the landlord will need to incur in order to have the works overseen and administered.
This will then be finalised into a final sum that takes into account the VAT that is applicable. This is then presented to the tenant for their review and response. Tenants will often find themselves in a position where they do dispute the overall content of the landlord’s Schedule of Dilapidations and qualified demand.
If indeed they find themselves in this situation, they will also then need to instruct the services of a dilapidations surveyor to formally advise them.
Here at Stokemont, we act for both landlords and tenants alike. If you would like to discuss your dilapidations requirement with one of our team of experienced and qualified building surveyors, please feel free to get in touch with us today, and we will be more than happy to assist and advise.
