How to avoid costly Dilapidations?

Commercial tenants should know the potential cost of dilapidations when their lease ends. The bill for repairing and decorating the property can be thousands of pounds, and many tenants are caught off guard as they focus on their new premises. Keeping the property in good repair throughout the lease is essential, and many business owners are unprepared for the dilapidation process. To avoid a hefty bill, tenants should understand dilapidation costs and plan accordingly.

What kind of things do Dilapidations include?

Dilapidation costs vary depending on lease agreements and may cover the removal of various fixtures and fittings, such as partitioning, cabling, signage, safes, lift shafts, furniture, and plants installed since the start of the lease. They may also include the replacement of kitchen, WC facilities, carpet, and lighting, as well as redecoration.

How do we mitigate the risk of costly dilapidation?

Read the Fine Print

Before signing a lease, make sure to read the fine print and understand the implications of dilapidation. A full repair lease may require you to pay for structural damage to the building, which can be costly if you have a short lease and little benefit from the investment.

Think before making alterations.

Tenants must obtain formal consent from their landlord before making any alterations, which should be documented in a license to alter. Tenants must consider the cost and time required for reinstatement works at the end of the term. Failure to do so may result in significant expenses and delays. Therefore, tenants must allocate sufficient resources for reinstatement works before the end of their term.

Keep on top of the repairs.

Commercial leases must be adhered to strictly, including the decoration covenants that mandate tenants to update the interior every 3 years and the exterior every five years. Failure to comply with these terms will result in significant costs at the end of the lease term, as additional work will be required to meet the requirements. Tenants must fulfill their obligations to avoid any financial consequences.

Seek Legal Advice

It's essential to have a solicitor review your lease agreement and a surveyor inspect the building before signing. A dilapidations survey may seem unnecessary, but identifying potential liabilities can save you money in the long run. Ensure your repairing obligations are fair and the landlord can enforce them during the lease. Note that a landlord is not required to provide a schedule of dilapidations before the lease ends, so consult with a building surveyor to assess potential liabilities and carry out any necessary repairs.

Negotiate

Negotiation is a crucial step at the beginning - ensuring you are delighted with the lease terms and a reasonable dilapidation schedule.

Budget for Dilapidation Costs

Companies must be aware of the actual cost of dilapidations, as it can become a significant financial burden towards the end of a lease. Failure to allocate funds for this purpose could lead to dire consequences, including bankruptcy. To avoid such a scenario, estimating dilapidations at the start of the lease and setting aside provisions for it throughout the lease term is imperative.

All time to undertake repairs and make good

Ensure you allow ample time to complete all necessary repairs, adjustments, and alterations before the end of your office lease. Failure to do so may result in costly penalties. To ensure quality work, consider hiring a reputable office fit-out company with experience in dilapidations work. If you choose to do the work yourself, carefully review your lease agreement to determine the required redecorating and cleaning standards. As a leading dilapidations contractor, Dilapidation Contractors has a proven track record of delivering exceptional results and restoring commercial properties to the highest standards.

Conclusion:

Creating a Schedule of Conditions is wise to protect yourself from potential lease liabilities and covenant breaches. Document everything from lease negotiations to paperwork execution and keep the property in good condition to minimize end-of-lease liabilities. If you plan on modifying or renovating the property, follow lease procedures and obtain the landlord’s permission.

If a Schedule of Dilapidations is issued, we suggest consulting with an experienced surveyor to assess the property and respond to the landlord’s claim. Use your surveyor’s technical arguments and negotiation tactics to dispute the claim. If a resolution cannot be reached, consider other dispute resolution options. A Schedule of Dilapidations will outline the necessary work to restore the property, which can be costly. Don’t let dilapidations catch you off guard – be prepared!

Our team of experts can help you manage your end-of-tenancy obligations and ensure that you only perform the necessary work.