What are Dilapidations?
Dilapidations are a Landlord’s claim in respect of alleged repairs, breaches and making good to their property. As per the terms of their lease, they require their tenant to address these in advance of the end of the lease term.
Dilapidations will cover all condition changes and alterations that have arisen during the tenant’s lease.
They can include, however are not limited to repair, decoration, reinstatement or replacement.
When is a Schedule of Dilapidations Required?
As the end of the tenant’s lease term approaches, it is normal for the landlord to take stock of the property condition in the form of a Surveyor’s Report known as a Schedule of Dilapidations.
Once armed with this report, the landlord serves it upon their tenant, thereby ensuring the tenant has ample opportunity to address the various dilapidations prior to their departure.
A Schedule of Dilapidations Response can also be prepared by the Tenant’s Dilapidations Surveyor in response to having been sent a Schedule of Dilapidations by their Landlord.
Our robust approach to property inspection and lease review ensures our Schedule of Dilapidations Reports are comprehensive and thorough, ensuring Landlords or Tenants are fully informed and can ensure the property meets the lease’s requirements.
This approach ensures our clients are fully aware of the Schedule of Dilapidations of the property as the tenant’s end of lease term approaches.
What is the Dilapidations Process?
1. Checking the Lease
We will start by checking the lease to establish the legal and contractual requirements in respect of the demise’s decorations, yielding up and alterations clauses. This will very much set the tone for the Surveyor’s approach to inspecting and accessing the property condition during their inspection.
2. Site Inspection
Once we have a full understanding of the lease’s legal and contractual requirements, the Surveyor will then undertake a comprehensive and methodical site survey. During the inspection all parts of the tenant’s demise will be checked, commented upon and photographed.
3. Schedule of Dilapidations
Once the Surveyor has completed their inspection, they will then prepare their Schedule of Dilapidations Report. This will set out all of the breaches, repairs, redecorations or reinstatements that are required by the tenant to the demise.
4. Schedule of Dilapidations Costings
The Surveyor will then carefully cost the various breaches as part of the Schedule of Dilapidations. Commonly this is done in a tabulated manner to ensure ease of both Landlord’s or Tenant’s Surveyor response. Costings are usually achieved through Construction Cost Indices, contractor quotation or Surveyor research.
5. Sharing the Schedule of Dilapidations
Once the Schedule of Dilapidations and Breach Costings (also commonly referred to as the Quantified Demand) is ready. The Landlord will commonly share this, or serve it upon the Tenant. The Tenant will then either accept or dispute the report.
6. Schedule of Dilapidations Negotiations
At the negotiation stage, the Landlord’s and Tenant’s respective Surveyors are going to aim to resolve any differences in the extent of the Schedule of Dilapidations or the costs within the Quantified Demand. As with any professional opinion, it’s relatively normal for there to be differing views. At this stage of the process will aim to iron these out, arriving at an agreed final scope of works, or cost of works.
7. Schedule of Dilapidations Resolution
Once the Schedule of Dilapidations has been resolved, the Tenant will either reimburse the Landlord for the breaches, or alternatively remedy and yield up the property for handover to the Landlord. *In the event of non-resolution, legal action would need to be taken by the Landlord against the tenant for those Dilapidations that aren’t remedied.
Here at Stokemont, we believe that Dilapidation costs should be transparent and clear. As a guide our prices are as below, in order to obtain a fixed cost, please get in touch with our Surveying team who will be happy to advise.
We also allow for up to 3 hours of discussion and negotiation with the Landlord’s or Tenant’s Surveyor within our fixed Schedule of Dilapidation fees.
Commercial Property with 1 – 3 Floors
From £1,400 + VAT
Commercial Property with 3 + Floors
From £1,500 + VAT
Our team of Surveyors are not only highly experienced but importantly they are also qualified.
We’re proud to confirm our Surveyors hold membership status and accreditation to some of the world’s leading professional governing bodies including; the Royal Institute of Chartered Surveyors (RICS), the Chartered Institute of Building (CIOB), the Chartered Institute of Arbitrators (CIArb), The Chartered Association of Building Engineers (CABE), the Pyramus and Thisbe Club (P&T) and the Centre for Effective Dispute Resolution (CEDR).
These are some of our top Dilapidations tips for both Landlords and Tenants alike.
Dilapidation Tips for Tenants
1. Schedule of Condition Report
At the start of the Lease, instruct a Surveyor to prepare a comprehensive Schedule of Condition Report of the property. This will ensure all of the defects and issues are fully recorded. This will offer significant protection when it comes to future Dilapidations claims and discussions.
2. Landlord Discussion
Discuss with the Landlord early on in the Dilapidations procedure if they would like any of the alterations to be left in situ. In many cases these will add value to the rentability property and the Landlord may take the view that they offer a benefit to future Tenants. This could save you the removal and reinstatement costs.
3. Rectifying Defects
Defect rectification and presenting the property back to the Landlord in a “white box” format will offer significant savings as the Landlord is unlikely to have claim for loss of rent, contractor cost and works management fees during the course of the necessary making good decorating or construction work to the property.
Dilapidation Tips for Landlords
1. Schedule of Dilapidations Report
Have a comprehensive Schedule of Dilapidations Report prepared well in advance of the Lease expiry. This will ensure that you’re fully abreast of the breaches and can then open discussions with the Tenant at the earliest opportunity. This will bear far better results in having the breaches rectified.
2. Making Good Vs Cash Settlement
Once armed with the Schedule of Dilapidations Report, it’s sensible to open discussions with the Dilapidations Surveyor confirming if you’re prepared to accept a cash settlement from the Tenant, or whether you will require the Dilapidation breaches rectified. This will aid speed of resolution, while also making for a smoother procedure.
3.Interim Dilapidations Inspections
Interim Dilapidations Inspections will ensure that you’re fully abreast of the Dilapidations that have arisen to the property. This will ensure that you can stay on top of those more costly breaches ensuring the property is well maintained. This is particularly necessary to external parts of the property. This will ensure the Tenant rectifies these as opposed to leaving them until the end of the lease term.
Typical Dilapidation Surveying Questions
What is the Dilapidations Protocol?
The Dilapidations, or the ‘Pre Action’ is a framework and protocol that applies to commercial property within both England and Wales. It ensures there is a procedure in place to best handle a Landlord’s lease breaches and claims for dilapidations, remedial work and damages against their Tenant.
What is a Dilapidation?
Dilapidations is the term used to describe Tenant breaches that have occurred to the property during the lease term. Generally speaking dilapidations can be categorised into three distinct categories; Reinstatement, Repairs, Redecorations. The tenant will be contractually liable to rectifying these upon the expiry of the lease.
What is a Quantified Demand?
The Quantified Demand will monetise the Landlord’s claim for dilapidations against the Tenant. The demand will confirm the total sum the Landlord requires from their Tenant in order to remedy the various breaches that the Schedule of Dilapidations has picked up.
Who pays for the Schedule of Dilapidations?
While the Landlord will initially pay for a Surveyor to prepare the Schedule of Dilapidations, the Tenant will be responsible for those fees which will likely form part of the Quantified Demand that is presented and served upon the Tenant.
When should a Landlord prepare Schedule of Dilapidations?
A Schedule of Dilapidations should be prepared in the run up to the expiry of the Tenant’s lease. The Landlord will want to ensure that the Tenant is given the Schedule of Dilapidations with sufficient notice and time to enable the breaches to be rectified prior to their departure. We would advise this is prepared within the last 3 months of the lease term.
What if a Tenant disagrees with the Landlord’s Dilapidations?
If the Tenant disagrees with the Landlord’s Schedule of Dilapidations or Quantified Demand they should instruct their own Surveyor to inspect the property, review the Schedule of Dilapidations and respond to it. The two respective Surveyors are then likely to discuss and negotiate an agreed scope of works, or quantum of cost.