Commercial Surveyor Services

Bradley-Mason LLP is a Chartered Building Surveying practice who offer the full range of Surveying, Building Consultancy and Project Management Services throughout the UK.

Our senior level team provide expert advice, with a focus on a quick turnaround service to maximise value and to fully understand our client’s businesses and property requirements. Ranging from investment funds and private Landlord’s to High Street retailers and commercial Tenant’s, we offer advice on the whole life cycle of their property interest from acquisition to disposal. Our aim is to predict your needs and ensure your expectations are exceeded. We question your requirements to ensure that our services are tailored to your current and future needs.

An Introduction To Dilapidations

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What are Dilapidations?

Dilapidations is the term normally used for repairs required under a Lease.  Most commercial Leases in the UK place an obligation on the Tenant to undertake a variety of repairs, decoration and other express covenants which may include complying with Legislation, cleaning the Premises or reinstating any alterations at the end of the Lease.  Dilapidations is the term generally used for the works which a Landlord asks a Tenant to undertake either during the term, or at lease end.

The Difference Between Residential and Commercial Tenancies

In the UK the main difference between most residential and commercial agreements is that typically a Landlord would be responsible for the repairs to a residential property and the Tenant would be responsible for repairing a commercial demise. The exact terms of this are dependant upon the terms of the Lease, which is the Contract between the Landlord and Tenant.  The basic legal principles of any Dilapidations Claim is therefore based on Contract Law.

Record of Condition

There is often a requirement to record the condition of a building either prior to a Lease or before some construction work or access onto a property is made.  This is often referred to as Dilaps or Delaps although this would normally be called a Schedule of Condition.  This is a detailed record of the condition of the building and when used in a Lease can be very useful to limit a Tenants liability at the end of the term or illustrate works a Landlord is claiming.

What is a Schedule of Dilapidations?

A Schedule of Dilapidations is the document which the Landlord would prepare to identify the works required by the Tenant. This would typically identify why the Tenant is in Breach of the Lease, what Lease clauses they should comply with and the works a Landlord considers are necessary.  In some cases the Landlord may advise the Tenant of the cost of these works.  If served during the Term this is known as an Interim Schedule of Dilapidations, or in some cases a Repairs Notice.  If the Lease is about to end the document may be called a Draft Terminal Schedule of Dilapidations, and if the Lease has ended then the Landlord would be making the claim for Terminal Dilapidations.  The final claim is also known as a Quantified Demand.

Interim Dilapidations

If a Landlord is concerned over the condition of their property then under most modern Leases a Landlord can undertake an inspection, assess whether the Tenant is complying with the terms of their Lease and issue a Notice on the Tenant.  Depending upon the wording of the Lease, the Landlord may issue a Section 146 Notice or a Simple Repairs Notice which the Tenant must comply with.   In some cases if the Tenant does not comply, the Landlord can enter the property, undertake the work and claim back the cost from the Tenant.

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Does the Landlord Have to Serve a Schedule of Dilapidations?

Overall there is no obligation on the Landlord to remind the Tenant of the works they should undertake under a Lease. It is the Tenants responsibility to read the Lease and undertake the works required by their Lease.  Under most Leases, a Tenant is required to reinstate any alterations they make and in some cases a Landlord must notify the Tenant if they require reinstatement.  This is not always the case and the Lease will often place the obligation on the Tenant to reinstate any alterations they have made.

How do you Assess the Standard of Repair?

This is something a lot of Tenants are unsure over, in particular if they are undertaking the work. The wording of the Lease will typically state the extent and quality of works required and in some cases this may be limited to the condition shown in a Schedule of Condition, which would record the state at the start of the Lease.  The age and character of the building is also important as the standard of repair on a new property may vary from a short term Lease on an older site, which may have been let many times.  A basic principle which is often followed is that a Tenant is required to undertake the repairs, to a standard which would be acceptable to a reasonably minded Tenant, having regard to the “age, character and location of the property”, on Lease commencement.

How do you Know What Work to Undertake?

Hopefully most Landlord’s would be helpful in advising the Tenant of the works which they consider needed by the end of the Lease.  In some cases a Landlord must notify the Tenant if reinstatement of alterations are required and in some cases the colour of decoration, the type of carpet or similar must be agreed with the Landlord.  If a Tenant is unsure or requires more detailed advice then it can be useful to prepare a Dilapidations Assessment.  This can be prepared by a Chartered Building Surveyor and it would be similar to a Schedule of Dilapidations. It would review the Lease, consider the Tenants obligations, assess the condition of the building and suggest the works which may be required.  This could be useful if a Tenants requires an early indication of work required.  It is also very useful to provide a future Dilapidations budget, in particular if required for accountancy purposes, where under FRS102 a Dilapidations Assessment may be required by Auditors to provide future provision in companies accounts.

Dilapidations Procedures

Procedures should be followed by both Landlord’s and Tenants when dealing with Dilapidation’s. In particular the Royal Institute of Chartered Surveyors provide useful guidance in the form of the RICS Guidance Note, Dilapidations in England and Wales, 7th Edition.  It is also important to follow the Dilapidations Protocol, which is the Pre-Action Protocol for claims for damages in relation to the physical state of a property and this is published by the Property Litigation Association.

What do you do if you Receive a Claim from the Landlord?

Whether received during or after a Lease, the first step would be to check the terms of your Lease or similar agreement to establish if  you are liable for the property and the parts claimed. It may be useful to refer to a Chartered Building Surveyor for further advice. If the Lease has ended then the Dilaps Protocol requires the Tenant to respond to the Landlord within 56 days, otherwise they may incur penalties if the Claim proceeded to Court.

The further defence and negotiation of Dilapidations can be a difficult and protracted process and we would recommend the advice of a Chartered Building Surveyor at all stages of this process.

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Dealing with Dilapidations – what you need to know

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The vast majority of commercial leases contain repairing obligation clauses which specify the extent of the tenant’s responsibility to maintain and repair the property being leased. The landlord will be concerned to see that the property is not devalued by a tenant’s neglect, so clauses in the lease will set out cleaning, redecoration, repair, prevention of alteration etc. Failure to comply with these clauses will leave the tenant open to landlord action to enforce the lease covenants.

Dilapidations are breaches of covenant to repairing obligations, leaving the landlord to recover the loss suffered as a result of the tenant’s failure to maintain the property as per the lease terms and/or return the property in its original state at the end of the lease term.

Bradley-Mason LLP are leading specialist commercial dilapidations surveyors acting for tenants and landlords in all aspects of dilapidations and leasehold repair matters. Our Dilapidations Surveys are highly detailed investigations into the current condition of the building and can be undertaken during the lease term or towards the end of a tenancy.

Established in 2004, we use a proactive approach to advising clients aimed at ensuring compliance with the Dilapidations Protocol while avoiding unnecessary costs and minimising the need for lengthy disputes or legal proceedings. Take a look at some of our Dilapidations Settlements and Surveys Case Studies to see the depth and breadth of our work.

Why tenants should consider dilapidations at the outset

When searching and budgeting for business premises, business will typically consider obvious cost lines such as rent, business rates, utility bills as well as any service change and fit-out costs. However, thinking about dilapidations liabilities that might arise at the end of the lease is unlikely to be front of mind at the beginning of the term. Unfortunately, ignoring or underestimating the impact of dilapidations can lead to potentially expensive and unexpected costs being incurred.

Much better outcomes can be achieved by agreeing clear repairing and dilapidations clauses at the outset. This is key information that the tenant can use for assessing the suitability of the premises before signing the lease and estimating their liability during and at the end of the lease.

In particular, the following factors should be taken into account:

  • Age, size and type of property
    Are you looking to rent modern office premises or a period building? Is it a small retail unit or a large industrial shed?
  • Construction materials
    What is the physical condition of the building? What building materials are used? Is there evidence of deleterious materials or contamination? Is the building statutorily compliant?
  • Lease term
    How long is the lease? Is it a new lease or are you taking over a remaining lease from another party by way of assignation?
  • Schedule of Condition
    Does the lease contain, or can you insist on obtaining, a photographic record to show the property’s condition as a benchmark for your repairing obligation?
  • Repairing obligations
    What is the extent of your liabilities? Are you responsible for the interior or the entire building? Do you need to redecorate at the end of the lease? Who repairs the roof?
  • Fit-out
    Are there any conditions/limitations for fitting out the leased premises? Do you need to remove your fit-out and reinstate the property to its original condition when you exit?

What happens at the end of the lease term?

A commercial lease will usually allow the landlord to serve a Schedule of Dilapidations on the tenant specifying any repairs that the tenant is liable for during the lease term and within a reasonable amount of time after the end of the lease. We would recommend that a specialist dilapidations surveyor such as Bradley-Mason LLP is instructed to prepare and serve the necessary documents.

Where a dilapidations liability exists, the following options may be suggested:

  • The tenant will complete the necessary works at their own expense. Where they fail to do so, the landlord will instead complete the necessary works at the tenant’s expense.
  • The landlord will complete the necessary works at the expense of the tenant.
  • The tenant will pay the landlord compensation equivalent to completing the necessary works, regardless of whether the landlord actually carries out the works.

How Bradley-Mason LLP can help

Dilapidations is a complex area that requires specialist expertise to advise and guide both landlords and tenants. The sums involved in disputes and litigation can run into millions of pounds, so getting the basics right at the beginning is of critical importance.

At Bradley-Mason, our experienced dilapidations surveyors provide extensive expertise and professional advice regarding potential dilapidations under new or existing lease arrangements. We can also help with regular advice in respect of interim dilapidations during the lease term. Whether you are a landlord concerned about your tenant’s breach of repairing obligations, or a tenant concerned about your landlord’s unrealistic dilapidations claim, we can advise on the obligations under the lease, ascertain the legal position and develop a strategy to agree an acceptable outcome.

Get in touch to discuss your dilapidations matter with our expert team.

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Dilapidations and VAT Update

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As many are aware, the HMRC has revised their approach surrounding the treatment of VAT on payments relating to damages and compensation i.e. dilapidations. The new approach we understood will come into effect from 1st March 2021, after the HMRC have advised a push back from the initial date of 1st February 2021.

Following recent rulings in the European Courts of Justice, compensation and damages payments for exiting a contract early have been considered as a payment which is envisaged under the contract, hence should be consider for VAT. Previously, HMRC classified such payments as outside the scope of VAT because they were not paid under the contract.

Whilst there is still uncertainty regarding the impacts to dilapidations settlements, it is considered that such payments of damages, will fall within the scope of VAT. Landlords and Tenants therefore need to plan for this and consider the implications of VAT at an early stage, including making allowances from a cash flow perspective.

We appreciate dilapidations can be a mind-field, never mind the complexities surrounding VAT and here at Bradley Mason, we are well placed to advise how best to exit your property. Please do not hesitate to contact the team for further assistance.

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3 Reasons You May Need A Dilapidation Survey

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As one of the leading dilapidation surveyor specialists in the UK, Bradley-Mason LLP act for landlords and tenants in all aspects of dilapidations and leasehold repair. Our proactive approach to advising on dilapidations ensures compliance with the dilapidations protocol and is designed to avoid unnecessary costs, so that a settlement can be reached without the need for legal recourse.

Commercial dilapidation surveys are essential, especially if you are a contractor, developer or landlord about to start a new project. The in-depth property survey assesses and documents the state of building elements and structure including minor wear and tear. A detailed report reveals the work required to restore the property back to its original condition before the tenancy.

Dilapidations surveys are needed to give landlords an insight into whether maintenance contracts have been adhered to in accordance with the terms of the tenancy agreements. Works such as building construction, developments, infrastructure projects, road works, excavations and demolitions have the potential to cause faults in structures if the correct precautions are not taken, making any damage costly to remedy. Since it is often hard to prove how this happened and who is to blame, a dilapidation survey may be a good idea.

By commissioning an independent third-party surveyor, fairness is guaranteed for all parties involved, while bias and underhand techniques used to create or prevent additional works or affect the financial implications can be eliminated. Commercial properties from across all sectors including office, retail, leisure and industry are likely to have a need for a dilapidation surveys.

Here are three key reasons as to why a dilapidation survey may be required:

  1. Dilapidation surveys are a useful precautionary measure, highlighting the existing condition of the property including any areas that may be vulnerable to damage, and protecting the interests of all parties in the event of a claim.
  2. Dilapidation surveys are a useful tool to help understand the condition of the structures before any construction work, enabling precautions to be taken in order to minimise damage, and to aid with site restoration after the work has been completed.
  3. Dilapidation surveys provide solid written evidence to counter any fraudulent claims and liabilities, protecting the interests of all stakeholders in the event of any claims that may arise.

At Bradley-Mason LLP, we recommend that dilapidations are considered at an early stage and well in advance of the Lease end, whether we are acting on behalf of a landlord or tenant. Landlords will find it useful to know the condition of the building before the Lease expires so that the tenant can be fully notified of any works required. While some landlords prefer early implementations so that the work can be carried out and monitored for quality, others may choose a cash settlement instead. In either case, it is advisable to develop a strategic approach to facilitate the best outcome for all concerned.

For expert advice and to discuss your requirements, please get in touch.

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Dilapidations: what are your rights as a commercial landlord?

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When a commercial lease agreement comes to an end, the ensuing dilapidations process can be tricky and is often contentious. Put simply, dilapidations represent ‘exit costs’ for the tenants, associated with returning the property back to its original, pre-let state. When a Schedule of Dilapidations is presented to the tenant, it can often come as an unwelcome surprise, and disputes can arise.

As a landlord, it’s worth remembering that dilapidations are there to hep protect your interests from the actions of your tenants. You may find it help full to carry out a dilapidations survey on your commercial property as the end of the tenancy is approaching, in order to smooth the process.

Let’s take a look as your rights as the property owner and how you will be protected.

Why do you need a dilapidations agreement?

Dilapidations agreements are primarily put in place for your benefit as the property owner. When your tenants were first presented with the lease contract, it will most likely have contained repairing obligations to make your tenants liable for the condition of the property, including decoration covenants to ensure the building is kept in a reasonable state, and alteration and reinstatement clauses. Crucially, the contract will also stipulate that any amendments to the property must be restored to their original state at the end of the lease or tenancy.

These legal clauses are for your protection, ensuring that when the tenants vacate the building, your property remains in the same rentable condition as it was before they took possession.

What happens when your tenant moves out?

Before you tenant vacates the property at the end of the tenancy or lease, it may be necessary to notify them that you plan to enforce any dilapidations agreement in order to return the property to its original condition.

A building surveyor will draw up a Schedule of Dilapidations which sets out the required repairs, renovations and redecorations and the costs associated therewith. Should your tenant refuse to honour this agreement, either party can take legal action, so that a fair settlement can be reached and any payments enforced.

What is the process for pursuing dilapidation payments?

In the event that the terms of the dilapidations agreement have not been met by your tenant, or that any repairs and amendments are not of the required quality, you should consider taking further action.

While it is in both parties’ interests to settle the matter out of court, you may have no choice to pursue the matter through the proper channels if the tenant refuses to engage, refuses to make the changes you requested, or you feel that you may have been wronged.

At Bradley-Mason LLP, we typically advise our clients to carry out a thorough property inspection before the end of any tenancy agreement, so that ample time is provided to allow for any dilapidations disputes to be settled out of court – a quicker and lower cost option all round.

What happens if the matter goes to court?

If the dilapidations dispute does go to court, you will be required to produce evidence of the tenancy agreement along with evidence of the property’s condition following the most recent tenancy.

Based on the evidence and testimony provided by yourself and your tenants, a judgement will be made by the courts. If they rule in your favour, the tenant will be required to pay for the dilapidations and cover your legal fees too.

However, there are occasions where natural processes (e.g. subsidence) may have taken their toll. If the property was in poor condition, this in itself may also have resulted in a dilapidation, for which the tenant may not be responsible. In many of these instances, you may have to rely on insurance cover for the building repairs.

 

Dilapidations can be a complicated and often contentious matter that can be notoriously difficult to resolve. This is where our dilapidation surveys can offer real benefits. Our dilapidation surveyors will help identify the areas where damage or alteration to the property has occurred and where tenants are liable for repairs. We can even provide expert assistance to help with any court cases.

To find out more about commercial dilapidation surveys at Bradley-Mason LLP and how we can help you, contact us today and we will be delighted to answer any queries.

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