Commercial Dilapidations

As one of Bradley Mason’s key specialist areas, we have developed a proactive approach to advising on Dilapidations for commercial leases and residential surveys dealing with leasehold liabilities.

Acting for both Landlords and Tenants our fresh approach, when carrying out our surveys, ensure unnecessary costs are avoided and a swift resolution is reached.

Commercial Dilapidations Assessments

As highly experienced Chartered Surveyors, we have the specialist knowledge and proven track record of dealing with Dilapidations.  As a national practice, no matter where you are in the UK, we can help.  Our team of fully qualified professionals provide the best quality advice available.

We would also recommend if advice from other consultants, for example, mechanical, electrical and structural engineers is advisable to fully investigate the condition of the building to ensure a fully comprehensive Report.

What is a Dilapidations Assessment?

A Dilapidations Assessment is a Report produced to assess a Tenant’s Leasehold liability of the property they occupy.  It firstly reviews the Lease documents to establish the Tenant’s obligations under the Lease.  A survey is undertaken to assess the condition of the building and establish how the property has deteriorated and what works are required to comply with the terms of the Lease.  The Assessment outlines the works which are considered necessary and includes an estimated cost of the works needed to undertake the relevant repairs, reinstatement and decoration.

Dependent on what your lease states the tenant must do the required works to put the property back into repair; or agree a sum with the landlord to cover the cost of the works.  You may have a full repairing lease or internal repairing obligation only and you may also have a schedule of condition appended which will limit your liability.  The Assessment will explain what you are liable for and the costs of doing these works or reaching an agreement with the landlord.  The Assessment can be undertaken at any time during the Lease, although would typically be prepared within the last year of the Term when a Tenant is considering vacating the premises.

Is a Dilapidations budget needed within your Accounts?

Many Tenants need to put a provision within their Company accounts to budget for future Dilapidations.  Your Accountant may suggest a figure is budgeted, particularly if you have agreed to a specific obligation when you leave a building, for example, to remove your fitout or redecorate the property at the end of the Lease term.  An assessment can predict the future costs and ensure that you are complying with accountancy practice and have a realistic budget in place.

What is a Schedule of Dilapidations?

A Schedule of Dilapidations is a document which a Landlord would prepare to notify a tenant of the works needed to comply with the terms of the Lease.  Whilst the Landlord does not have to prepare a Schedule before the Lease has ended they will often prepare this as an initial indication of the works they require.  This is very similar to a Dilapidations Assessment, although it is prepared from a Landlord’s perspective and it indicates the works he will require when the Tenant vacates.  This is then usually updated once the Lease has ended and the Landlord will make a final claim for any works which they consider are required to comply with the terms of the Lease.

We prepare Schedule of Dilapidations for a variety of Landlords on a wide variety of property types. We also prepare these for Intermediate Landlords, where a tenant may have sublet a property.

What is a Dilapidations Response?

The Landlord often prepares a Schedule of Dilapidations before the end of the Term and serves on the Tenant so they can complete the work.  A Tenant may be unsure whether they are liable for all the works and whether there are any alternate ways of implementing the repair?  A Dilapidations Response Report would consider a Landlord’s claim in detail, analyse the terms of your Lease and advise on whether the Landlord’s claim is reasonable.  Budgets can be provided for the works or the Landlord may accept a cash settlement as an alternate means of satisfying the terms of the Lease.  The Response Report would form part of initial negotiations with the Landlord or their Surveyor which would allow either works to be agreed and implemented before the Lease has ended, or enter into initial dialogue over a possible settlement.

Do you need a Dilapidations Survey?

Whether our client is the Landlord or Tenant, we recommend that Dilapidations are considered well in advance of Lease end, to ensure the most favourable outcome on both sides.  For Landlord’s, it is very useful to know the condition of the building well in advance of the end of the Lease and ensure the Tenant has been fully notified of the works required.  Some landlords prefer the works to be implemented and by notifying the Tenant early, the works can then be monitored to ensure defects are not hidden and the quality of work is adequate.  Other landlords may prefer a cash settlement and by raising Dilapidations early there is the option of negotiating an agreement with the Tenant.

For the Tenant, reaching an agreement prior to Lease end can be beneficial as it often saves time and money, in particular in avoiding a protracted dispute with the Landlord.  A Tenant will always want to leave the property without incurring any additional costs, especially as once the Lease has ended they no longer have control over how the Landlord implements the repairs.  A Landlord’s claim can then quickly escalate and additional costs are claimed, including loss of rent, professional fees and other costs.  By understanding the potential works early enquiries can be made to establish historic events, competitive quotations can be obtained and early dialogue entered into with the Landlord to try and reach a satisfactory outcome.  Some Tenants also implement periodic surveys during a term to assess the works they will need to do when the Lease ends and ensure the standard of maintenance throughout the Tenancy is to a good standard and reduces future Dilapidations.

Our team of qualified professionals will ensure you will always receive the best advice from an experienced Dilapidations Surveyor.  We work throughout the country, from London to Leeds and beyond.  We also work with a broad range of businesses from SMEs through to national and international franchises.

 

How much could you save!

AVP Property, TJX Europe

“Working on TJX Europe’s behalf, Bradley Mason have achieved very advantageous  settlements for each of our recent TK Maxx store and DC closures. Not only were these secured below expenditure expectations, but Bradley Mason also managed the process very smoothly, working closely with our contractors to deliver outstanding results.” Claire Kenney

Over the last 12 months we have:

• Saved an average of 50% on all settlements;

• Been instructed to act on national portfolios totalling over 2,000 sites;

• Handled over 150 individual claims for Tenants, with 90% agreed before lease termination;

• Prepared and managed over 50 claims for Landlords, with 75% settled within three months.

Case Studies

Terminal Dilapidations Defence

Countrywide Surveyors, Burton upon Trent

Bradley-Mason were engaged by Countrywide Surveyors in 2011 to defend a claim for damages on a high street estate agency premises. The claim had been served by the Landlord after the Lease had ended.

The property was unusual because it had originally been occupied at the start of the Lease as a freezer centre and was later assigned to the estate agency with the rear areas used for internal storage and car parking.

Countrywide Surveyors Countrywide Surveyors Countrywide Surveyors 2

 

It was not possible to adopt our usual strategic approach of managing commercial dilapidations pre-lease expiry as the unit had already been yielded up to the Landlord prior to our involvement. We therefore focused our defence on the reasonableness of the Landlord’s claim and, in particular, whether the Landlord had actually suffered a loss as a result of the Property’s condition.

Under Section 18(1) of the Landlord and Tenant Act 1927 we strongly argued that much of the Landlord’s claim would be superseded by any future occupant’s fit-out and substantiated our arguments with valuation evidence which we obtained from a local valuations specialist. As a result, we were able to swiftly conclude negotiations and avoid any increased legal costs or delayed claim.

The initial claim from the Landlord was approximately £73,000 and full and final settlement was agreed at £18,000. By combining a detailed assessment of the actual claim, a common sense approach to the physical works which would actually be required by an incoming Tenant, and specialist valuation advice, Bradley-Mason were able to significantly reduce dilapidation costs and avoid a protracted dispute.

Get in Touch

For expert knowledge of Dilapidations across the UK, simply call us at one of our branches, or complete the form below to get in touch with us today. We look forward to hearing from you.

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