Thank you for clicking on today’s Property Survey blog. In today’s blog post, our building surveying team will be focusing on property dilapidations.
For those readers who are either the landlord or a tenant of a commercial lease, property dilapidations will be close to the forefront of their mind as the lease expiry fast approaches.
Dilapidations are a landlord’s claim and tenant’s exit costs as the tenant’s lease term approaches its completion and nears an end.
The dilapidations report will be prepared by a surveyor, usually instructed on behalf of the landlord, to visit the property, comment on the issues they have noted during their inspection.
Importantly, setting out those elements that are deemed to be breaches under the terms of the landlord and tenant’s lease.
What are the Dilapidations Breaches?
There are three different types of breaches that landlord and tenant will need to be well abreast of, these are as follows:
Reinstatement will be required when the tenant has made authorised, or unauthorised alterations to the property.
In many cases, alterations are a perfectly acceptable form of change that a tenant can undergo, often enabling the tenant to maximise the potential and use of the space they are renting form the landlord.
However as the tenant approaches the end of their lease, the landlord is going to want to ensure that the property is given back to them without any restriction and therefore is rightfully going to ask their tenant to reinstate the property back to its pre-lease layout and arrangement.
Typical reinstatement issues could be changes of the usable layout of the property such as partitions, shop fit outs, or signage.
Repairs are one of the more simpler dilapidations to identify and are essentially defect and issue that have arisen during the course of the tenant’s occupancy.
Commercial leases are likely to be held on a fully repairing and insuring (FRI) tenure.
This means that the tenant inherits and retains the repairing and insuring liabilities for the property.
It is therefore a reasonable expectation for the landlord to expect these repairs to be undertaken and incremental periods throughout the course of the tenant’s occupancy.
Tenants will often overlook or hold off expensive repair, thereby resulting in a higher or more extensive breach at the end of their lease.
A handy tip for all tenants, is to ensure that prior to taking occupancy of the property, they have a comprehensive and detailed Schedule of Condition report undertaken.
This report will act as the all important go to scope of condition and proof of damage at the end of the tenure, while also being a key part of both the landlord and tenant’s dilapidations discussions.
The final breach is redecoration. Redecoration is again another simple one and effectively means that the tenant needs to redecorate the property at incremental periods throughout the lease.
However, while also ensuring that the property is handed back to the landlord often in a white box format.
A white box format is the industry term for painting, often replacing floors and handing back to the landlords in an easy to let condition.
Tenant and Landlord Dispute
With property dilapidations, it is not uncommon for tenants to dispute or take issue with the extent and quantum of the landlord’s surveyor’s dilapidations report.
Should this arise, tenants would be well placed to seek specialist advice from a dilapidations building surveyor.
If you would like to discuss property dilapidations with our team of building surveyors here at Stokemont, please give us a call today.