Dilapidations - A Time Bomb Waiting to Happen

14/11/2007

Dilapidations are a significant issue for nearly all those occupying commercial premises on a lease.

According to Paul Dudley Smith, group director of commercial property consultants, Aitchison Raffety, many leaseholders wait until the end of the lease term or receipt of a Schedule of Dilapidations and Repairs from the landlord before considering redecoration and maintenance of their premises and then receive a nasty shock.

 “On larger commercial units an initial claim for repairs from the landlord of in excess of £300,000 is not uncommon”, says Paul.  “Such claims can be inflated further by the issue of fees, loss of rent and service charge.  If works are not implemented prior to the expiry of the lease, tenants may find that rent is payable until such time as the building has been repaired and is ready to be handed back to the landlord.”

Often tenants will be expected to remove all of their fixtures and fittings and reinstate alterations subject to appropriate licences, redecorate internally and externally, possibly re-carpet and in some cases, even re-clad or repaint industrial warehouse buildings.

“Whilst many tenants feel they are saving money by taking no action, it is essential that the issue of dilapidations is considered several months, if not a year or two, before the end of the lease”, advises Paul.  “By being prepared and undertaking appropriate repairs and redecoration, tenants can minimise the impact of future costs and avoid what can be a substantial time bomb at the end of their lease.”

The standard and level of repairs required to be undertaken for any leasehold building will be dictated by the lease terms and case law.

Paul Dudley Smith can be contacted by email at Aitchison Raffety: paul.dudleysmith@argroup.co.uk