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In simple terms, dilapidations’ clauses represent the exit costs for a tenant at the end of their commercial lease. According to the terms of their lease, tenants are expected to return the property to the landlord in exactly the same state of repair. However, in recent months there has been an increase in landlords making false Dilapidations claims against a tenant. According to Robert Cant, GJS Dillon’s Associate Director of Commercial Building Surveying, this is an avoidable situation for tenants provided expert advice is sought when they first take on a commercial property.

An interim schedule can be served at any time during the lease term by the landlord if they believe that the tenant is not looking after the property properly. They may for example ask the tenant to carry out repairs. Since the interim schedule is normally served during the mid-term of the lease, this gives the tenant ample opportunity to carry out the works. 

A terminal schedule of dilapidation is usually served within the last 18 months of the lease. It tends to be more detailed than the Interim Schedule, listing items of disrepair that need to be addressed before the end of the tenancy. Ideally, the tenant is given the opportunity to complete the works themselves and avoid incurring any extra expenses when the lease ends.

Mr Cant says problems often arise for tenants when they are served their final schedule of dilapidations at the end of the lease.

‘The problems for the tenants arise when the Landlord claims that there has been additional damage to the property, immediately before Lease expiry. At this stage, on the assumption the breaches are bona fide, the tenant is left with no option other than to settle the claim by way of financial damages.’

‘If tenants wish to avoid being exploited by landlords in this way, they need to seek professional advice right at the start of their lease. Nearly all commercial leases include a clause which requires tenants to ‘keep in repair’ the entire premises, regardless of what condition the property was in when they take it on.

‘A Chartered Surveyor can advise you on the terms of the lease and help you understand exactly what you are signing up for before you sign the contract. Crucially, they can also put together a comprehensive schedule of condition at the onset of the lease. Such a schedule will document in words and photographs the state of repair of premises at the start of the lease. Whilst not negating all repairing liabilities, this ensures the tenant only needs to return the premises to the same state at the end of the lease’ concludes Mr Cant

For further information about GJS Dillon’s Commercial Building Surveying Services see https://gjsdillon.co.uk/service/building-surveys/