It's almost impossible to leave premises in absolutely perfect repair at the end of a lease. However the landlord's bill in response to the dilapidations, or wants of repair, often comes as a shock to tenants.
The good news is that there are legal limits on the amounts a
landlord can charge. There's no right to charge dilapidations
if the building is about to be demolished, or if any works you do
would be made redundant by the landlord's plans. For example,
if you need to leave the building façade in repair, but the
landlord would re-render the whole façade in order to re-let
the building, the façade repair works shouldn't be in
the schedule of dilapidations. The next step is to consider what,
exactly, is meant by "repair". There's no need to
return lifts and air conditioning apparatus with any type of life
expectancy, unless the lease expressly requires this. The key to
unpicking the types of liability is a careful forensic analysis of
the lease and any licences for alterations or schedules of
condition.
In addition the Landlord and Tenant Act 1927 imposes a limit on
the amount the landlord can charge. If the reduction in the value
of the landlord's interest is different to the cost of the
works, the dilapidations bill is capped at the lower of the
two.
Your project team should also include a buildings surveyor. He or
she can advise on whether the costs estimates suggested by the
landlord are fair ones and whether there's a cheaper way of
complying with the lease obligations.
If you're following best practice you'll provide for
future dilapidations costs in each year of the lease. Whether or
not you do that, it pays to read the first demand with a fine
toothcomb.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.