Commercial property leases will normally include clauses for a tenant to redecorate, repair and leave a property in a certain condition when they vacate at the end of a lease term. If this has not or considered to have not been met, then the landlord will usually make a dilapidations claim.
Receiving a landlord’s dilapidations claim can be very upsetting, especially if the tenant thinks they have left the property in good condition. A dilapidations claim can cost a tenant thousands of pounds.
As cost pressures mount following the pandemic and the cost-of-living crisis, we have seen an inevitable increase in dilapidations claims and commercial tenants need to ensure they protect themselves.
What is a dilapidations claim?
Dilapidations are when a landlord makes a claim against a tenant for the cost of putting the property back in a good condition when the lease comes to an end. Even when a tenant thinks they have done everything as they should, a landlord might not, and a dispute can happen. The landlord is entitled to damages for any of these works not done by the lease-end.
A landlord will want to maximise their claim so that the property is left in the best condition when it comes to reletting and a tenant will want to minimise the claim as much as possible if they believe they have left the property in a good state.
How to minimise dilapidations payments
When a tenant is served with a dilapidations claim, it is vital that they respond in the precise way outlined by Section 5 of what is called the Dilapidations Protocol.
So, what must a tenant do?
To help this process, it is important to be aware that there are two types of dilapidations surveyors required in a dilapidations claim. A lot of tenants will instruct a chartered building surveyor when they are faced with a dilapidations claim, but they also need to be aware to instruct a valuation surveyor too!
- The Chartered Building Surveyor
The building surveyor prepares a building survey report which outlines what section of the lease has been breached and what work the tenant must carry out. The building surveyor will help to push back on repair costs as much as possible on behalf of a tenant.
- The Chartered Valuation Surveyor
The valuation surveyor advises if a tenant is affected by the legal cap on damages and will help to negotiate costs further by using what is known as the statutory diminution in property value cap. Section 18 (1) of the Landlord and Tenant Act provides a statutory cap for dilapidations, meaning the cost of repairs should never be more than the effect of the dilapidations on the value of the landlord’s property. Diminution Valuations is the term that describes the legal limit, or cap, on damages paid in dilapidations disputes. This is very important to note, and a diminution valuation is required to help minimise what a tenant pays out in a claim.
When each type of chartered surveyor carries out their own work, it is then combined to make sure a property survey provides the best outcome in negotiations.
Whenever a tenant is served with a dilapidations claim, it is important to use both types of dilapidations surveyors. Watch our animation to learn more.
At Dilapsolutions, we employ both property dilapidations surveyors required to achieve the best outcome. If you are a commercial tenant and are faced with a large dilapidations claim and unsure what to do, then get in touch for a free no-obligation discussion.