What Are Dilapidations?
The basic condition obligations a commercial tenant must meet when handing back a property.
Dilapidations are the repair, redecoration and reinstatement obligations a commercial tenant owes to the landlord at lease end, usually enforced through a schedule of dilapidations served by the landlord's surveyor.
What Do Dilapidations Include?
Dilapidations include three main categories of obligation: repairing any damage or deterioration, redecorating the property to the specified standard, and reinstating any alterations you made back to the original layout.
Most commercial leases are Full Repairing and Insuring (FRI) leases, which place the burden of maintaining the property squarely on the tenant. This means that if the air conditioning breaks, the carpets wear out, or you install meeting rooms, you must address these issues before you hand back the keys.
Who Is Responsible for Dilapidations?
The commercial tenant named on the lease is entirely responsible for dilapidations, meaning they must cover the cost of all required repairs and reinstatement works before vacating the unit.
Even if the property was in poor condition when you moved in, a standard FRI lease often requires you to put the property into a good state of repair, not just keep it in its current state. The only exception is if you negotiated a schedule of condition at the start of the lease.
Been served a schedule?
Get a fixed price for the works. We price line by line against your schedule.
When Are Dilapidations Assessed?
Dilapidations are typically assessed in the final six months of a lease term, prompting the landlord's surveyor to issue a terminal schedule outlining the required works.
However, landlords can also serve interim schedules during the lease if they believe the property is falling into severe disrepair. It is always better to understand your potential liability early so you can plan the required works into your exit strategy.
How Much Do Dilapidations Typically Cost?
Dilapidations typically cost between £8 and £20 per sq ft for offices, £5 to £15 per sq ft for industrial units, and £10 to £25 per sq ft for retail spaces, depending on the specific lease covenants.
These costs scale with the level of fit-out you have installed. A heavily partitioned office with extensive data cabling will cost more to strip out than an open-plan space.
What Is the Difference Between Doing the Works and Paying the Claim?
Doing the works means hiring a contractor to physically repair the property before your lease ends, whereas paying the claim means handing over a cash settlement to the landlord after you vacate.
Carrying out tenant dilapidations works directly is almost always the cheaper option. Landlords use premium rates when calculating a cash settlement, whereas hiring your own contractor allows you to secure market rates for the exact same scope of work.
Frequently Asked Questions
Are dilapidations legally binding?
Yes, dilapidations are derived from the legally binding repair and reinstatement covenants within your commercial lease agreement.
Can I ignore a dilapidations claim?
No, ignoring a claim usually results in the landlord pursuing the costs through the courts, which increases your overall financial liability due to legal and surveyor fees.
What happens if I leave without doing the works?
If you vacate without completing the works, the landlord will serve a quantified demand for the cost of doing the works themselves, plus their surveyor fees and potential lost rent.
Been served a schedule?
Get a fixed price for the works. We price line by line against your schedule.
If you've been served a schedule, the next step is to get the works priced. Our team carries out dilapidations works for a fixed price, priced line by line against your schedule, so you only pay for what the lease actually requires.