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Dilapidations for Landlords

Dilapidations for Landlords

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Dilapidations – advice for Landlords

Landlords frequently believe dilapidations is an issue to be dealt with when the Tenant’s lease is due to expire and often when there has been no contact with the Tenant regarding repairing obligation during the term of the lease.

We believe a proactive approach is more beneficial to both landlords and tenants whereby we regularly review dilapidations issues during the lease term to prevent repair costs  escalating and with a view to the building being handed back in a satisfactory condition to enable re-letting to a new tenant.

Many modern leases incorporate a clause (see “Jervis v Harris – 1996”) giving a landlord the right to enforce repairing and other covenants during the lease term by presenting the tenant with a Repairs Notice.  This requires the tenant to undertake works and enables the landlord to commission works and recover costs from the tenant as a debt in the event of the tenant failing to comply. This process does need to be carefully and properly managed however to be properly executed.

In the event of a tenancy expiring with evident tenant breaches of covenant we will follow the dilapidations protocols and arrange to present the tenant with a Schedule of Dilapidations on behalf of the landlord, detailing works which are considered to be necessary to comply with the lease terms.

We recommend that this is commenced prior to the lease termination date to give reasonable time for the tenant to comply.  If the tenancy has expired and the tenant is not in occupation to undertake works, then we will present a costed schedule of dilapidations on behalf of the landlord summarising the landlord’s financial claim to compensate for loss.

Determination of ‘loss’ can sometimes be complex and is essentially determined by Section 18 (1) of the Landlord and Tenant Act 1927 which provides that a claim for damages cannot exceed the amount by which the value of the premises is diminished owing to the breaches of covenant and there are further limitations to a claim if a landlord plans to redevelop, refurbish or make substantial alteration to the premises after lease expiry.

 

The procedure when acting for a Landlord usually involves:-

1. Careful study of the express repairing covenants contained in the lease. The wording of the lease is critical in defining the tenant’s liability and varies considerably from one lease to another.

2. Detailed survey of the building to establish its condition and preparation of an interim or terminal Schedule of Dilapidations.

3. Consideration of the proposed use of the building/premises at the end of the tenancy to establish correct method of claim assessment based upon cost of works or diminution of value in accordance with the provisions of Section 18 of the Landlord and Tenant Act 1927.

4. Service of the Schedule of Dilapidations in accordance with the Property Litigation Association protocol and Civil Procedure rules.

5. Required document disclosure and negotiation with the tenant to negotiate a fair settlement where common ground can be found. In the event of civil proceedings, preparation of the necessary submissions and provision of expert witness services as required.

A detailed estimate of fees will always be provided prior to commencement of professional advice together with regular statements of account detailing the work undertaken and time allocated to the case. Modern leases usually incorporate provision for a landlord to recover fees from a tenant but this will depend upon the lease drafting (upon which we can advise before commencing a dilapidations claim).