Dilapidations claims: top tips for landlords

Insights - 12/06/2020

In this post Graham Halsall, Partner specialising in Property Disputes, sets out some top tips for landlords when pursuing a Dilapidations Claim.

Prepare early

When it comes to a terminal Dilapidations Claim, preparations should begin well in advance of the expiry of the year.

For example, you should make sure you have your documentation in place. Over the course of the lease term, there may have been subletting, assignments and / or licence arrangements in place. The tenant may have carried out alternations, sometimes with consent some without consent. Sometimes there will be licences for works and sometimes there will not. Preparing early allows you to build up a paper trail of supporting documents and identify any gaps and therefore develop a strategy on that basis.

You may also find that steps need to be taken and / or notices served on the tenant well in advance of the lease expiry in order trigger the repairing or reinstatement covenants on the part of the tenant. Preparing early gives you time to do that.

It can take many months (even years) to resolve a Dilapidations Claim. Therefore, preparing early gets the process started quicker and should lead to a speedier resolution.

Consider dilapidations even when “renewing” the lease

When the lease is being renewed (often under the Landlord & Tenant Act 1954) the issue of dilapidations is often overlooked. However, a renewal involves the termination of a lease and (the grant of another) so a Dilapidations Claim is still appropriate in a renewal situation. Depending on the circumstances of each case, there are different ways of preserving or enforcing the claim. Advice should be obtained in each case.

Do not ignore the market

The commercial letting market is a factor that is occasionally overlooked when decisions are made about the enforcement and settlement of a Dilapidations Claim. If the market is in decline, you could be facing a drop in rental income and / or the property could lay vacant for a while. Therefore, a dilapidations payment could be the only source of income for a while and this puts greater emphasis on the claim. Similarly, the solvency of your tenant is also something to keep an eye on, especially in a declining market and especially when the tenant has brought the lease to an end by exercising a break right.  Where cashflow is an issue for the tenant, it may be more appropriate to pursue remedies other than a claim for damages.

Evidence is key

In a Dilapidations Claim, evidence is key. Whether that it is photographic evidence of damage or technical expert evidence on the lifespan of M&E appliances or whether it is evidence of the anticipated cost of repair, evidentiary support is key to a Dilapidations Claim.

If you have any further queries regarding  dilapidations please do not hesitate to contact Graham Halsall who leads the property litigation team in our Redhill office. 

Disclaimer:

Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.