The Dilapidation Clause in Leases

Dilapidations is a word often found in leases. It refers to work the tenant is required to carry out (or to pay to have carried out) and may include any or all of the following:

  • repairing the property
  • decorating the property
  • doing work to ensure the property complies with legislation
  • reinstating the property to the way it was before the tenant carried out any alterations to it (even if the alterations were approved by the landlord).

The amount of work will depend on the terms of the lease; there can even be cases where the tenant is required to put the property into a significantly better condition than they were in at the beginning of the lease.

The Landlord’s Position

When tenants do not comply with their obligations the landlord has various options available, including:

  • Taking back the property. During the lease the landlord may notify the tenant of any work that should be done and if the tenant does not comply the landlord can take the lease back
  • Making the tenant pay. This may include the cost of the landlord doing the work and all associated expenses, such as surveyor’s fees, as well as At the end of the lease if the landlord is claiming damages for dilapidations he can also claim for the reduction in value of the property caused by the dilapidations and he can claim for rent lost through being unable to let the property.

A landlord who wants to make a claim against the tenant for dilapidations must follow certain procedures and timescales; not doing so will affect their right to claim costs and interest.

The Tenant’s Position

A tenant who expects a claim for dilapidations should make provision for it in their accounts and, if at all possible, seek specialist advice on the steps they should take as well as the value of any possible claim before the claim is made. It can make commercial sense for the tenant to do the work rather than leave it to the landlord as this will give the tenant more control over costs.

A lease is a binding legal obligation and should not be entered into without legal advice. Get the advice FIRST before signing the lease – afterwards may be too late.

If you have any doubts, call Lynn or Katie, Commercial Property Solicitors at Excello Law on 0845 257 9449 – we’re here to help.

Disclaimer: Nothing in the Legal Insights section and this blog is intended to provide legal or other professional advice and, if readers are interested, they should consider taking separate legal or other professional advice accordingly.