Dilapidations.

What are Dilapidations?

Dilapidations are breaches of lease covenants to repair a building. Typically leases include such phrases as “to keep or put in repair”, placing onus on a tenant to repair either the whole or part of a building they occupy. usual breaches of repair covenant include leaking rainwater goods leading to damp penetration into the interior of the building through to a failure to re-decorate. Dilapidations claims, at lease termination are expensive and often far in excess of a tenant’s yearly rent. Morgan Maire are Specialists in both preparing and serving Schedules on behalf of Landlords or mitigating claims on behalf of tenants. In 95% of cases claims can be defended as outlined below:

Acting for the Tenant
A Schedule of Dilapidations can be served at any time during the period of a lease or following termination. A Schedule served during the lease is referred to as an Interim Schedule or if within the last 3 years, a Terminal schedule. An Interim or Terminal Schedule served during the lease enables a tenant to undertake the works themselves provided these are of course reasonable and can be substantiated. As a tenant has no right of re-occupation following lease termination the service of a Final Schedule requires a claim to be settled by way of a monetary payment. Such a claim includes for the cost of remedial works plus additional items including loss of rent, service charges, professional fees and VAT.

Luckily for a tenant a number of defences exist and include the following:

Should the Landlord decide to serve an Interim Schedule and assuming the original lease term exceeds 7 years with three or more unexpired, a tenant can seek relief under the Leasehold Property Repairs Act 1938. Damages may only be sought for items of disrepair affecting the reversionary value of the building at the end of the lease.
In the case of a Final Schedule, protection may exist in the form of Section 18(1) of the Landlord & Tenant Act 1927. Section 18 states that the Landlord cannot recover damages in excess of the sum by which the value of the building has been reduced as a result of a tenant’s failure to repair. Section 18 can also mitigate or even extinguish a claim where a Landlord intends to demolish the subject premises or undertake alterations such that a tenant repair would have been pointless.

A well advised tenant entering into a lease can also mitigate future claims through careful wording of a lease repair clause allowing for the inclusion of a Schedule of Condition. Morgan Maire have prepared numerous Schedules of Condition, which identify the condition of the building in great detail and ensures that a tenant is required to return the building in no better repair at the end of their lease than identified in the Schedule. Our Schedules typically also identify alterations and thereby ensure that a tenant is not liable for reinstatement either during their term or at assignment.

Dilapidations Protocol
During April 1999 procedural rules were introduced in an effort to speed up and formalise dilapidations claim procedure. The protocol aims to reduce the prevalence of bogus and inflated claims and ensure that settlements are reached swiftly rather than protracted over many years. Morgan Maire are thoroughly familiar with the protocol and act within it when acting either for Landlord or Tenant.

Conclusion
Dilapidation claims are complex and expensive. Both Landlords and Tenants require sound advice. When acting for Landlord we provide accurate and robust Schedules capable of withstanding the closest legal scrutiny and negotiation.

For a Tenant we can quickly determine whether a Schedule is accurate, justified and enforceable. We can also offer advice as to statutory relief and general negotiation tactics.