How to Manage Dilapidation Cost?

Managing Dilapidation Cost

Dilapidation costs can be a significant burden for small business owners. The commercial property you have taken on the lease must be repaired at the end of the lease term. You may face financial trouble if you don't plan for dilapidation costs properly. If you know little about dilapidation costs and how to manage them, continue reading the following article. In this article, you will learn what dilapidation cost is and how it can be managed. Finally, you will also learn the factors that influence dilapidation cost.

What is the cost of dilapidation?

The cost of dilapidation is the cost of repairing and reinstating the previous condition of a leased property. After you take a commercial property on lease for several years, you will most likely alter its design, which may damage the property. You are responsible for making the necessary repairs at the end of the lease term. The cost of dilapidation can be challenging for you if you are a small business owner.

What are the things included in the dilapidation cost?

Dilapidation costs not only involve repairing damaged birds or sections of the building. It also includes;

Removing internal walls and partitions.

Stripping out cables and electrical wiring.

Removing additional furniture from the site.

Stripping out all the furniture installed in the bathroom.

Repairing damages and decorating with colours.

As a tenant, you are also liable to pay the rent loss to the landlord. The tenant is liable to pay the loss of insurance and all the professional or legal costs.

How can you estimate the cost of dilapidation?

An estimated cost of dilapidation can help you protect yourself from unexpected financial burdens. However, you cannot make a foolproof dilapidation cost estimation if you don't know what needs to be considered. Let's find out what are the things you should consider while making an estimation. First, hire a professional Chartered Surveyor to thoroughly survey the property and estimate the repair cost. Your landlord may also provide you with an estimated cost of dilapidation, which can vary from your actual cost.

How much do the Professional Surveyors charge for the survey?

The cost of conducting a survey depends on various factors, such as the property size and situation of the case and the surveyor's experience and capability. It may cost you around £500 - £1800+ VAT. It will be best to contact a professional surveyor and ask for an estimate of his charges.

Is a dilapidation provision necessary?

A tenant is not obligated to make provisions for dilapidation in the UK. However, putting aside money for the possible cost of dilapidation can help you reduce your financial burden. A dilapidation provision is considered a liability for the tenant as it will be used to maintain and repair the property. However, maintaining a dilapidation provision throughout your lease term will significantly reduce the financial burden for the leased property's dilapidation cost.

Dealing with the cost of dilapidation

To deal with the cost of dilapidation, you must consider a few points as a tenant. The first may include gaining a clear understanding of the lease terms. It will help you understand your repair responsibilities and obligation for restoration as a tenant. Next, you can conduct a periodic inspection of the leased property. It will help you identify damages that you have caused to the property. Prompt identification of the damaged property will help you repair it immediately. Moreover, ask for a professional opinion about damaged property and negotiate with the landlord about the cost of dilapidation. Finally, setting up a provision for dilapidation can help save you from financial burden.

Conclusion

If you want to manage the dilapidation cost, you should follow specific steps. You may start by thoroughly understanding the lease agreement. Here, your landlord will explain your responsibilities and obligations to repair the damages you cause to their property. After understanding the duties and applications, you must prepare a plan for regular property inspection. Take front actions to repair any damages you may have caused to the property. Maintaining a provision for the cost of dilapidation could be an excellent idea. It will save you from financial burden, especially if you are a small or medium business owner.