Landlord or Tenant: are you aware of your dilapidations options post COVID-19?

Toby Ramsden
As we emerge from the Covid-19 crisis with the hope of returning to some semblance of the ‘new-normal’, the future of commercial office space has been up for debate. Are we going to abandon the office altogether, adopt a more agile and collaborative workspace or slip back to old habits?

The matter of dilapidations (a claim for damages at the end of a tenancy) is an often overlooked part of the property transaction and disposal process. At Faithful+Gould, we believe that across all sectors we are likely to see some shift in requirements from occupiers and landlords alike. From both sides of the fence it is more important than ever to be prepared and well informed with regards to a claim for dilapidations damages.  

We are advising our existing client base, both landlord and tenant, on the best course of action to navigate the dilapidations minefield. As ever the key takeaway remains that early engagement is critical to achieving the best possible outcome at the end of the tenancy.

Amidst the Covid-19 pandemic, it is not clear how things may look when the dust settles however, we have outlined below some of what we believe will be the main short-term impacts to consider.

Break Clauses

Many businesses have suffered as a result of lockdown measures as offices, restaurants and shops sat vacant for many months. Similarly, many companies are realising that they do not require the same level of accommodation as previously thought. You may wish to consider implementation of a break (if applicable) and if so, it is essential that you understand the conditions of the specific clause. Failure to meet the conditions may invalidate the break, with the lease continuing at significant cost. Dependent upon the area of the demise we would recommend engaging with a property professional at least 8-12 months before you wish to vacate, but possibly earlier for a larger property.  

Sub-letting

If the requirement for space has diminished then sub-letting all or part of your demise may be an attractive option. We would highly recommend that you appoint a surveyor to produce a Schedule of Condition to record the state of the demise at the start of the sub-lease. Also consider the wording in the lease and the implications for repair, redecorations and re-instatement.

Repairs Notices and Jervis Vs Harris Clause

Many leases contain a Jervis Vs Harris clause, enabling a landlord to enter the property to undertake repairs, which can then be recovered from the tenant as a debt. What is typically an underutilised mechanism may now become more popular, particularly if a Landlord is concerned over the financial stability of their tenant. 

Dilapidations Exit Strategies: are you aware of your options?

A break clause within your lease may not be the only option. Please contact our Building Surveying team at Faithful+Gould to discuss additional strategies such as early surrender alongside your legal representation.

The best preparation for good work tomorrow is to do good work today

Don’t wait until the lease is nearly up, for both landlord and tenant there is plenty that you can and should do well before lease end!

We have seen an increased demand from occupier and owners alike to undertake dilapidations assessment reports. We are able to advise on the likely opening claim with supporting advice on mitigation strategies for tenant and a timeline for negotiations for landlord.

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