Commercial landlords may pursue a dilapidations claim against tenants who breach lease terms and leave the property in poor condition.

The success of any dilapidations claim depends heavily on proving the property's condition at the lease's expiry or break date.

If a landlord decides to make a claim, they must follow the Dilapidations Protocol, which applies in England and Wales. This protocol regulates end-of-tenancy damage claims, encouraging early document exchange and settling disputes to avoid Court proceedings.

When pursuing a claim, landlords need to prepare and serve a Schedule of Dilapidations - a legal document outlining lease breaches and the estimated cost of repairs. This document is typically prepared by a Chartered Building Surveyor.

Additionally, landlords should commission a Section 18 Diminution Valuation (DV) from a Chartered Valuation Surveyor. This valuation acts as a “statutory cap” on damages in England, Wales, Ireland, and the Isle of Man, limiting compensation to the lesser cost between remedial works or the disrepair's impact on the property's value. While a DV might seem counterintuitive if the value impact is less than the repair costs, it is crucial for countering opportunistic valuations from tenants and is also required under the Protocol.

Top Tips for Landlords:

• A landlord is far more likely to be successful with a dilapidations claim if the lease is worded effectively. As with any form of legal document, if there are ambiguities, this can cause problems when resolving conflict in the future.
• If a tenant does not allow access in the run-up to lease expiry, then a landlord should carry out a dilapidations survey within days of lease expiry/break.
• Many leases have a Jervis -v-Harris clause allowing landlords to enter a property during the term of the lease to remedy serious breaches of the tenant’s duties to repair. Using this clause is well worth considering when a lease expiry (or break date) is still some way off, but there are concerns about the tenant’s solvency or the risk of their company entering a CVA to escape any liabilities. A landlord can then carry out the (serious) works and recover the cost from the tenant as a debt due.
• When letting a property, a tenant may ask for a Schedule of Condition. Done properly, this accurately records the condition of the property at the start of the tenancy, ensuring that when the lease expires, it is clear what has deteriorated. Whilst this helps the tenant, it also helps to enforce the landlord's rights. Our chartered building surveyors will carry out a building survey and advise on the details of any breaches and priced repairs. This will make it clear what needs to be remedied by the outgoing tenant or if not done, what compensation the landlord is owed. We can go on to negotiate with the tenant on behalf of the landlord, to swiftly settle any disputes and avoid litigation where possible.

At Dilapsolutions, we offer a unique service by combining the expertise of Chartered Building and Valuation Surveyors. This integrated approach ensures optimal outcomes for resolving dilapidations disputes.

If you're a commercial landlord with concerns about dilapidations claims, contact us for more information.