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Schedule of Dilapidations: End of Property Lease Advice

At the end of a commercial lease, a landlord will arrange for chartered surveyors to assess the condition of a building. A report outlines the repairs required to return a property to its original condition as stated in the lease agreement.

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What Are Schedules Of Dilapidations?

Carried out by landlords or chartered surveyors, Schedules of Dilapidations are formalized reports that provide a precise breakdown of repairs that must be scheduled to reinstate a property to its original condition as stated in the lease agreement. They may also contain the sections of the lease agreement that have been breached. If you are a tenant who has been served an unexpected schedule of dilapidations, read how to respond to dilapidations claims.

This document contains details of all the items in a commercial rental property that are liable for repair by a tenant under the terms of the lease. There are three types of schedule of dilapidations reports: interim, terminal and final.

A schedule of dilapidation's primary purpose is to protect the value of a property by ensuring its condition remains intact. They help assess the condition of a building, from its integral structure to its minor damage. A terminal or final schedule of dilapidations typically outlines the repairs required and estimates the costs. These can help avoid much more costly repairs later on if left untreated.

An interim dilapidations schedule may be issued early in the lease that helps act as a reminder of what repairs must be carried out by the end of the lease. These can help avoid unexpected costs at the end of a lease. 

If dilapidations repairs are not completed by the end of the lease, a tenant may find themselves facing a dilapidations claim. This may take the form of quantified demand .

Before responding, a tenant should assess the validity of the schedule of dilapidations against the required obligations of the tenant stated in the lease. Tenants should also verify the costs (if these have been provided as quotes). The tenant may benefit from the services of a chartered dilapidations surveyor to help them do this. If a claim goes to court, a property expert witness may be required to help contest claims.

'Dilapidations' refers to the condition and physical state of tenanted property. This covers tenanted leisure property and commercial property. 'Dilapidations' specifically refer to breaches of the agreement between a tenant and landlord for the maintenance and repairs of a rental property.

The Schedule details everything a tenant must repair under the terms of their lease with the landlord. The aim of the Schedule of Dilapidations is to maintain the value of the property and keep the tenant from higher repair costs in the future.

A tenant's responsibilities in a property will vary – but the schedule should always provide the full repairing obligations list agreed with their landlord. Often, responsibilities for a tenant will include redecoration, remedial works, repair of premises damaged by mistreatment, poor repairs, or a lack of maintenance during the tenancy.

A failure to carry out these repairs or maintenance can amount to a breach of the terms of the lease, and a landlord will be able to issue a Dilapidations Claim against a tenant. A Dilapidations Claim can be made during the terms of a tenant's lease, or after the lease term has expired.

How Is A Schedule Of Dilapidations Prepared And Issued?

Landlords will usually issue a Schedule of Dilapidations using an assessment by a surveyor. The surveyor will inspect the property to see if any of the terms of the lease have been breached. The Schedule is usually issued before the termination of the lease, on the basis that the client can still access the property to provide any required repairs.

There are three types of schedule of dilapidations to be aware of:

  • Interim schedule of dilapidations. Usually put in place to ensure the tenant is aware of an immediate issue and can comply with the repair requirements as soon as possible. Interim schedules of dilapidations are issued during the course of the lease.
  • Terminal schedule of dilapidations. Usually more detailed and identify specific disrepair issues on the site or building in need of being dealt with. Terminal schedules are issued during the last three years to 18 months of the lease.
  • Final schedule of dilapidations. Schedules that cover issues such as remedial works, including their likely cost. This is usually issued in cases where the lease has expired, but the repairs have not been carried out on the property. Final Dilapidations schedules are issued after the expiry of the lease.
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The document should always specify the exact clauses that have been breached and, depending on when it has been issued, include specific costs.

In certain cases, a claim may include the details of a landlord’s additional losses resulting from dilapidations namely, being unable to collect rent and any reduction of the value to the property.

The type of Schedule of Dilapidations will depend on when they are served in relation to the time when the tenant’s lease expires. As such, there are three kinds of Schedule of Dilapidations and it is important to understand how each one works.

Interim Schedule, Terminal Schedule And Final Schedule

A Schedule of Dilapidations can be prepared at any time during the lease. The Schedule is usually prepared by a landlord themselves or by a chartered surveyor on their behalf. If this is done during the lease term, it is usually known as an Interim Schedule of Dilapidations (also known as a Repairs Notice).

An Interim agreement is usually put in place to ensure the tenant is aware of an immediate issue and can comply with the repair requirements as soon as possible. In other cases, an Interim Schedule will usually highlight areas where a tenant is considered to not be maintaining the property to an acceptable or expected standard. It will generally detail the outstanding and required works to be performed, such as decoration and repair, and other items to meet the terms of the lease.

On the other hand, a Terminal Schedule of Dilapidation can be issued from the last three years to 18 months to the end of the lease period. Schedules at this stage are usually more detailed and identify specific disrepair issues on the site or building in need of being dealt with. The intent of a Terminal Dilapidations claim is to ensure the property is kept safe from any further damage, so it maintains its value.

And a Final Schedule of Dilapidations is issued after the end of the lease. Final Dilapidations schedules cover issues such as remedial works, including their likely cost. This is usually issued in cases where the lease has expired, but the repairs have not been carried out on the property. In such cases, the cost can include claims for lost rent while the repairs are carried out.

Are you a Landlord or Tenant requiring assistance with a schedule of dilapidations related issue? If you have or are facing dilapidations claims or are just looking for some advice, our team can help. We help clients across England, Scotland and the rest of the United Kingdom.

Dilapsolutions has years of experience behind it and can provide clients with a wide range of services regarding a schedule of dilapidations and commercial property generally.

Dilapidations is a complex and specialist area. All those involved are always best served by involving qualified experts with the necessary knowledge, experience and information regarding commercial property and landlord and tenant legislation.

Dilapsolutions

Chartered Surveyors

We are the only dilapidations consultancy in the UK & Ireland that provides both Chartered Building and Valuation Surveyors, ensuring the best results for our clients.

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