Dilapidations are an inevitable part and cost of the use of any building because they are linked to the use and natural deterioration of the building and the need to reinstate the property at the end of the lease, including removing all of the tenant's fixtures and fittings.
Although inevitable, they are often unexpected as in the majority of cases the tenants are not aware, and have not made sufficient planning for this expenditure. Thus, at the end of a lease, they usually discover they have to pay to carry out extensive work to the building they are vacating, as well as fitting out the building they are moving into.
Dilapidations are an evolving piece of legislation because standards are generally set by case law. Agreement is usually the result of negotiation between surveyors, with the tipping point being the cost of litigation.
Tenant's alterations and installed services usually have to be removed and thus mezzanines and other fittings, which the tenant will inevitably consider add to the value of the property, will have to be removed, unless there is written agreement to the contrary.
Tenants do not always appreciate that when they erect demountable partitioning, their removal may incur the cost of a whole new ceiling and carpet when they vacate the office accommodation.
Similarly, if they are taking on an assignment from another tenant, they may well have to remove, or put into repair, items that they inherited from the previous tenant. The relevant standard of repair, unless amended within the lease, is not usually that at the start of the lease, or acceptable to the tenant, but good repair as defined by surveyors.
Relevant legislation and case law limits the claim for damages for works etc., to the amount the Landlord has lost in a capitalised loss of rent, by the lack of repair and the need to reinstate the building after the tenant has vacated.
Advice from a building surveyor will provide the appropriate level of expertise for each individual situation.
Author: Roy J Ilott, FRICS
After working in private practice and for several property owning companies, Roy Ilott set up his own practice in 1980 and this developed in the maintenance, refurbishment and extension fields. Over the last 15 years, this has been re-focussed to deal with defects analysis, dilapidations and reports on building surveying matters as an Expert Witness.
To demonstrate his commitment to providing independent expert reports on properties and defects across Southern England , he has opened a new office in Warminster, Wiltshire.