What Is A Dilapidations Liability Assessment?
A Dilapidations Liability Assessment (DLA) is a comprehensive report during which we thoroughly inspect and assess the condition of your property to provide an accurate budget for repairing any disrepair, redecorating, and reinstatement of alterations at lease end. This assessment is crucial for both tenants and landlords as it deals with their liabilities and shields them from potential disputes. The DLA provides an opportunity for our clients to understand the extent of damages that may need addressing, often settling disputes before they escalate into litigation.
Our experienced surveyors use their expertise to create a detailed report that includes practical advice on how to navigate through dilapidation claims. We ensure that all assessments are implemented with close attention to detail and accuracy, providing reliable results for our clients. It's important to note that this assessment not only provides a general overview but also includes specific calculations tailored to each individual property.
When is a DLA required?
Firstly, when considering the acquisition of a commercial or leisure property, be that by way of a new lease, assignment of an existing lease, or outright freehold purchase. Our reports itemise required works, along with budget costs, therefore informing:
- Whether the price/rent you are to pay should be adjusted
- The detail of a Schedule of Condition (SoC) to be attached to a new lease, to limit the extent of your repairing obligations (we work with our chartered surveyor colleagues at Raeburn Consulting who are experts in leasing commercial & leisure properties across the UK, negotiating the detail of lease terms both to include SoCs and to expressly exclude liability to repair certain key items)
- Budgeting under FRS 102 the accounting provision which allows for Corporation Tax recovery on annual sums set aside to accumulate to cover dilapidations at lease end
So, DLAs are equally as important in one-off as well as corporate acquisitions.
Additionally, it is crucial to commission a DLA during the lease period to accurately assess and budget for potential dilapidations at the end of the lease (FRS 102).
As the lease comes to an end, landlords often take the opportunity to file their dilapidations claims. This is a crucial time for an accurate assessment of the tenant's breaches of covenants to repair, redecorate, and reinstate alterations.
During this period, it is essential to address any damages or disrepair that may have occurred throughout the tenancy. As a result, tenants often find themselves with limited time remaining on their lease to address the necessary repairs and maintenance. This can create a significant liability for the tenant. It is however seldom sensible to do many works even if time allows, because of the risk that these might be snuffed out (superseded) by the owner’s subsequent works to alter, repurpose or modernise the property. More often than not, vacated business premises need more work done than just dilapidations to bring the property up to modern standards and fit with evolved demand.
So, the dilapidations claims at the lease end are, in practice, settled based on a sum of money as ‘damages’ paid by the tenant to the landlord. Our knowledge and the unique combined expertise of both chartered building and valuation surveyors ensure that the minimum sum is ultimately paid, and that realistic annual sums accumulate through DLAs (utilising FRS 102 for the Corporation Tax benefit).
Get A Dilapidations Liability Assessment
Dilapidations offers comprehensive Dilapidations Liability Assessments. If you're based in the UK or Ireland and need help navigating dilapidations in your local area, speak to us today and get a no-obligation consultation.