Disrepair Claims and Dilapidations at the End of a Tenancy

What are dilapidations?

Dilapidations usually refer to a claim made by a landlord at the end of a tenancy relating to breaches of the repair, decoration, condition and regulatory compliance provisions in a lease. Whilst failure to remove alterations and tenant fixtures and fittings are treated slightly differently under law – they are all generally referred to as dilapidations.

What is the procedure for starting a dilapidations claim?

The starting point for any dilapidations claim is the landlord instructing a specialist dilapidations surveyor to inspect the building and report on the condition. If there is a schedule of condition attached to the lease, this will impact on the likely value of the claim.

Parties to a claim must then strictly follow the ‘Pre-Action Protocol for Claims for Damages in Relation to the Physical State of Commercial Property at Termination of a Tenancy’ (the ‘Dilapidations Protocol’). Once the claim has been reviewed in detail and the tenant’s responses considered, the landlord should present a quantified demand setting out the total value claimed.

When should a dilapidations schedule be prepared?     

Ideally the landlord should identify the various breaches and present an initial interim survey around 6-12 months before the end of the tenancy. This will enable the landlord to identify what (if any) alterations should be removed and will give the tenant the opportunity to undertake some works before the end of the tenancy.

The surveyor should then be asked to reattend the property after the tenant has vacated in order to update the schedule to consider any further disrepair or tenant works. The tenant will then usually have 56 days to respond to the claim.

How do you serve a dilapidations schedule on the tenant?

There are strict rules in respect of service of notices under leases and there can be stringent time limits in respect of timings of the schedules. Landlords should seek legal advice as soon as the schedule has been prepared to ensure that the schedule is validly served on the tenant.

Can disagreements happen?    

Usually, parties are able to negotiate an amicable settlement without the assistance of the court. However, if parties are unable to agree a settlement figure, then the Court can seek to resolve any disputes. The Court will typically rely on specialist experts to help them decide any contested facts or practical issues.

Alternatively, the parties can utilise alternative dispute resolutions schemes tailored for disrepair claims.

What factors should the landlord consider before starting a disrepair claim?

The landlord should seek advice as soon as possible and contemplate the likely defences the tenant will reply upon. The landlord should seek to have a strategy in place at the outset including considering: –

• Whether they can afford to undertake the work and then seek to recover the cost back from the tenant and any lost rent;
• Whether a tenant in the market will take the unit in its current condition or if not all the works in the schedule are completed;
• The likely impact to the landlord’s reversionary interest if the works are not undertaken.
• Whether any of the tenant alterations have value and would be useful to new tenants.

What should a tenant consider when receiving a dilapidations claim?

A tenant should take advice from a solicitor and surveyor experienced in dilapidation claims as soon as they are in receipt of a schedule, as it should be responded to in a timely manner. The surveyor will assess the building and prepare a response to the claim and the solicitor can offer strategic advice on managing the dilapidations process and consider any relevant defences.

If you need any advice on dilapidations or disrepair claims, please contact a member of our property disputes team in confidence here or on 02920 829 100 for a free initial call to see how they can help.