With all businesses looking to cut costs at the moment, some tenants have been failing to keep their commercial properties in a good state of repair. As the landlord, you will naturally wish to recover your premises in the same, if not better, condition than when they were initially let.

Dilapidations are breaches of the tenant’s covenant to repair the premises during the lease term. Simon Walker, property lawyer at Talbot Walker LLP in Andover, outlines a number of steps that a landlord can take to ensure that they are not left out of pocket.

What can you do if you are concerned about the condition of tenanted premises?

Subject to the terms of the lease you may be able to serve an interim schedule of dilapidations on a tenant prior to the expiry of the term. However, if you are concerned that the tenant is not complying with the repair covenant, then the usual position would be to serve a section 146 notice specifying the breach of repair and the works that you require the tenant to carry out. This can be in the form of a schedule of dilapidations.

At the end of the lease term your lease should provide that you can serve a terminal schedule of dilapidations. You will need to ensure that you comply with the lease terms as to timings and service; otherwise you may lose your right to claim dilapidations. You will also need to consider the Dilapidations Protocol. This sets out a timetable for serving the schedule of dilapidations and the quantified demand that you must prepare, as well as how the information is provided to the tenant and vice versa.

If, through the protocol, you cannot agree to resolve the dilapidations dispute, you will have to consider issuing proceedings.

What damages can be claimed?

You have a right to claim:

  • the cost of repairing premises;
  • redecorating costs;
  • the costs of reinstating works carried out by the tenant during the term;
  • any costs incurred in the preparation and service of a schedule of dilapidations; and
  • loss of rent and any other sums payable under the lease for the period it takes to undertake the works set out in the schedule.

Can a tenant reduce their liability for dilapidations?

Yes, at the outset of the transaction where you are negotiating a new lease. The tenant can seek to agree with you that their obligation to repair is limited by reference to a schedule of condition. This schedule will record the general condition of the premises at the start of the lease, using photographs and a narrative, or it may record only specific items of disrepair. This means that the tenant will not be obliged to return the premises in any better state of repair or condition at the end of the term.

The tenant may also be able to rely on statutory relief from dilapidations under the Leasehold Property Repairs Act 1938 or under section 18(1) of the Landlord and Tenant Act 1927. If a tenant seeks to rely on these provisions, you should contact us immediately for advice.

Can a tenant’s liability for dilapidations be rolled over?

A tenant’s liability for dilapidations can be rolled over on the assignment of a lease and the new tenant, or assignee, will inherit any disrepair. In addition to any disrepair, the new tenant will also inherit the cost of reinstating any alterations that have been carried out during the term up to the date of assignment. It is up to the new tenant to negotiate a payment from the existing tenant to cover the cost of any potential dilapidations claim at the end of the term. Either way, you should not be affected by their arrangement.

If you are concerned that a tenant is not keeping one of your properties in a good state of repair, or you require advice on any other property matter, please contact Simon Walker on 01264 721705 or email swalker@talbotwalker.co.uk.

The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.