Dilapidation Assessment, Defence and Negotiations

What Is A Dilapidation Assessment

Under typical property lease agreements both tenant and landlord have a legal responsibility to ensure that the property is maintained to the standard agreed in the contract. The level of responsibility depends of the terms of the lease agreement between the parties.

Tenants

At the end of a lease agreement a tenant usually has to return a rented the property back to the landlord in an agreed condition (as specified in the rental lease agreement). It is essential that tenants, especially those with long-term leases, plan for the dilapidation of the property and budget for any make good repairs that may be necessary.

Before the outset of any lease, schedules of condition are extremely important to help determine the exact state of the various elements of the property, which will seriously affect/limit the tenant's obligations for repair at the end of the lease term.

When the lease expires or the tenant operates a break clause is the time when dilapidations come into play. In best practice the Landlords should ideally serve a claim for repair under dilapidation 12 months, before this occurs. The new Dilapidations protocol ensures that any claim must be qualified and not exaggerated and take into account the future plans of the property (the Landlords intention must be clear).

The assessment is carried out by our qualified surveyors and their report provides essential information for the tenant. The dilapidation assessment crucially identifies any repairs or maintenance that the tenant will be financially liable for when the lease expires under the terms of the lease.

With regards to the tenant, once the term expires they will receive a dilapidations claim from either the landlords' surveyor or solicitor. These documents are not always expected and even if they are the level of claim can come as a shock.

The tenant then has a specified time to make a response to the landlords' claim (under the terms of the protocol). It is important that the response if undertaken correctly, as this will be the start of negotiations on the level of the claim. The claim can be settled either by the tenant undertaking the works highlighted in the schedule or by a monetary settlement.

From whichever side of this situation you are on it is advisable that a Chartered Building Surveyor is commissioned to either prepare the dilapidation assessment or to advise on the defence of the claim. It is essential for either party that they commission a Chartered Building Surveyor that understands and will comply on your behalf with the Dilapidations Protocol and fully understand the terms within the lease documents.

Landlords

Whether you manage a single property or have a portfolio of rented properties it is of course hugely important that the current condition and value of your property is maintained. A dilapidation survey is crucial in determining a baseline for the existing condition of a property.

Commissioning a dilapidations assessment report from DMP establishes the exact condition of a property prior to a new lease contract being agreed or an existing contract ending and helps to fix in place the liability of the tenant in regards to maintenance of the property.

Tenants

Do you understand fully the commitment that is made at the start of a lease term? Do you understand fully the terms of the lease (as each lease is worded differently)? You may be looking to move to smaller premises to reduce overhead, do you realise the potential for a claim that may outweigh the savings you thought you would make? There are many questions, some with easy answers but many that can turn out to be complicated and costly depending on the details of the lease.

Commissioning DMP to provide advice, undertake a condition survey or defend a claim for dilapidation can save time and reduce costs. DMP can assist at both the, commencement or termination of a lease.

What is in the Dilapidation claim?

The report is a comprehensive survey of the property/area of demise for which the tenant is legally responsible for under the terms of the lease. The survey is carried out room by room focusing on the condition of elements such as the walls, floor, ceiling, windows and doors. The survey also extends to external areas should this be deemed to be included within the lease details.

Other areas of inspection include services and associated fittings/equipment such as electrics, heating etc. The schedule is normally defined into sections such as reinstatement, repair and compliance along with redecoration.

The figures in the claim form a qualified demand as require under the dilapidation protocol and are evidence based costs using the RICS Dilapidation price book and actual costs. As surveyors we sign a declaration stating that the claim is a true reflection of the situation in property.

Negotiation

Both tenants and landlords will benefit through commissioning a dilapidations assessment. As well as carrying out the report our surveyors can also act as intermediaries and negotiate a settlement between tenant and landlord if there is any dispute on the financial liability surrounding the findings of the report.

Reference

"James Wyatt - Operations Manager -Nu*Stock Ltd
I wish to express our gratitude for the help you gave us in dealing with the dilapidation report and claim we had from our previous landlord.

As you know we felt the claim was excessive and unrealistic for the building despite the nature of the lease we were bound to.

Now we are in the throes of finalising the last items I can say without any reservation that it has been a pleasure to work with the Delaney Marling Partnership. With the level of expertise and number of excellent contacts you have I would also have no hesitation in coming to you again in the future or recommending you to anyone that is looking for help with Dilapidations."

For further information contact us through the website or feel free to call us on 01482 623955 for further help and advice.