For commercial property tenants, one of the biggest potential causes of friction with the landlord is the condition of the premises, and what constitutes normal wear and tear. Here Anderson Associates, who provide commercial property surveys from their base near Martlesham, look at some simple steps you can take to avoid dilapidation disputes, whether you own the property or are just renting it out.
Read the Terms of the Lease – and the Small Print
Many tenants (and some landlords) don’t always fully understand the legal responsibilities they have when they sign a lease. Tenants may not be aware of their requirement to maintain the premises in good condition so that it can be re-let again. Equally, landlords may not know what they are allowed to claim for, and that there is a cap on claims as well.
‘The repair costs claimed shall in no case exceed the amount (if any) by which the value of the reversion in the premises is diminished,’ according to Section 18 of the Landlord and Tenant Act 1927 which covers this area. The Act also says that no repair costs are recoverable if the premises are going to be pulled down or demolished at the end of the tenancy.
Keep Good Records
It’s essential that, as a tenant in particular, you keep records of everything from the start of the lease negotiations to the executed lease documents, to help resolve any disputes at the end of the lease.
Good maintenance and facilities management during the occupation of the property will also help minimise your end-of-lease liabilities, whether you are a tenant or a landlord.
Anderson Associates’ principal, Paul Anderson, is a fully qualified chartered surveyor who has many years of experience in looking at commercial properties in Kent, Essex, many parts of London as well as our home county of Suffolk.
Be Careful of Making Improvements
Any alterations to the property could be enough for the landlord to instigate a claim. Again, this comes down to the idea of keeping the property in good condition. So, even if you think as a tenant you are improving the property, you may still be held liable.
You may also be required to redecorate the property under the terms of the lease. Often this can be once every three years for the outside, and once every five years for the interior. So you could also be liable for a claim if you fail to meet this schedule.
Again, it comes down to reading the lease properly when you sign it, and the need to maintain a good dialogue with your landlord.
Get Independent Chartered Surveyors Involved
If there is a dispute, then an independent chartered surveyor is the person to talk to. They can advise both parties on the repairs required, and the costs that each of them will need to pay.
Commission a Schedule of Condition to be Incorporated Into the Lease
The Schedule of Condition (SoC) is a separate document to the lease, and will show what condition the premises is in when the lease is signed. It will highlight any areas of the property which are already in poor condition. This may allow you to renegotiate the lease terms in the form of a rent free period to cover the costs of undertaking landlord responsibility works.
Towards the end of the lease the landlord will carry out whats know as a ‘Terminal Schedule of Dilapidations’ This will highlight any repairs and maintenance works the tenant is required to undertake prior to vacating the premises. It is not uncommon for this schedule to include landlord responsibility items as well as tenants.
Tenants can either get the work done themselves, to the satisfaction of the landlord’s surveyor, or pay the estimated costs directly to the landlord who will then get the work carried out. Sometimes surveyors can act on behalf of the tenant and negotiate substantially lower costs if they seem to be too high.
The SoC will allow a comparison to be made with the condition the premises was in when the lease was taken out compared to the condition the property is in prior to vacating.
This can frequently highlight landlord responsibility items or items in the same condition that should be omitted, as well as tenant enhancements that provide a benefit to the landlord which may further reduce the costs in the terminal schedule.
All these items could significantly reduce the outgoing tenant’s financial liability and should not be part of any claim by the landlord at the end of the lease.
The SoC is is usually put together by a chartered surveyor. For that reason, it should have some weight because it is produced by a qualified professional.
Commercial Property Surveys from Martlesham-based Anderson Associates
We carry out all types of commercial property surveys in Kent, Essex, Suffolk and many parts of London. We act for both landlords and tenants and can be relied on to give fair, impartial advice, whether we are advising on the repairs that are needed, or preparing a Schedule of Condition.
For more information follow this link or call us directly on 01473 623 656 or 0800 652 8285.