Dilapidations at the end of a Commercial Lease

Your liability to return premises to their original condition at the end of your lease, known as ‘dilapidations liability’ could stretch into hundreds of thousands of pounds.

This need to consider dilapidations applies to any lease, pretty much the only exception is if the whole building is going to be subject to demolition or major works.

Our forward planning and project management can substantially reduce a tenant’s dilapidations liability.

Vacating at the end of your lease

It is becoming increasingly common for leases to be agreed outside the 1954 Landlord and Tenant Act, which means that you do not have the right to a new lease at the end of the agreed term.

Therefore, you should consider vacating the premises well in advance of your lease expiring in order to reinstate the premises to their original condition. If you do not do this, your landlord is within his rights to appoint contractors to undertake this work at your cost. Such contractors have been known to overcharge the previous occupier for the necessary works.

Vacating when you are breaking your lease

The implications of not acting early are even more important if you are seeking to break your lease. If the dilapidations are not completely resolved in good time, the exercising of your break may not be valid and you will remain liable for rent, rates and service charge until the end of the term.

If a landlord is concerned about finding new occupiers, they may seek to delay the process. In such a case, good advice and expert lawyers are important, as well as timeliness.

Find your schedule of condition

We recommend that our clients have a Schedule of Condition prepared prior to occupation in order that it can be referred to at the end of the term when negotiating the dilapidations.

All being well, you should have a Schedule of Condition in place, so make sure it’s found early in the process; this may take a while if personnel have changed.

It will definitely help your case to avoid redecorating, or paying for redecoration, if you can prove that the walls in the gents were always painted purple!

If you’re vacating and don’t have a schedule, the negotiation will be more complicated, but there are still things we can do to help. Do make sure you get one done next time, though.

What if you have improved the place?

Just because you’ve done something that you think is an improvement, such as adding a smart kitchen or a swanky bar, it’s wrong to assume that this won’t need to be removed, or a payment made to cover the removal.

Alterations with landlord’s consent

Structural alterations are normally prohibited within a lease and internal partitioning, installation of kitchenettes and cabling, all require landlord’s consent.

Even though any such alterations were with permission, unless explicitly specified and ideally with all relevant information included as an addendum to your schedule of condition, their removal will still form part of your dilapidations liability.

How can we reduce your dilapidations costs?

We can advise you on the works the landlord could reasonably seek and then review the Schedule of Dilapidations served. We consider the list of necessary works for fairness, negotiate the list down if necessary and obtain realistic quotes for having the works carried out.

If you do the works yourself, you run the risk that the landlord will say they have not been done to an adequate standard.

There are also other measures we may be able to take depending on the individual circumstances.