Businesses hate uncertainty, and it comes as no surprise that business owners and directors want to minimise any periods of uncertainty.
One area that can cause uncertainty is when a business premise’s lease comes to an end and it is time to negotiate the dilapidations claim your landlord has presented to you.
Dilapidations is a term to describe the required repairs, or other non-compliances with the lease.
Many firms will accrue for dilapidations throughout the course of their lease, while others will choose to only contemplate dilapidations works right at the end of their lease.
Others will ignore them until the lease has ended, and a hefty landlord claim has landed on their doorstep.
Until your dilapidations claim is finalised, you may need to make financial provision in your business for a potentially substantial claim. This may run into tens of thousands of pounds, (or more), meaning that these funds are locked up and cannot be used for further investment. You might know this dilemma as an ‘opportunity cost’.
Leading chartered surveyors, Harrison Clarke, manages dilapidations claims for clients every day. Here, we answer some questions we are often asked.
About a year to 18 months before the end of your business’s lease, you should ask a specialist dilapidations surveyor to provide advice on how best to leave your property.
Your dilapidations surveyor may advise you to complete some work to allow you to comply with your lease requirements.
Whilst you won’t normally have a year’s worth of surveyor involvement before lease end, these timescales can help you to arrange any required construction work in good time and, more importantly, to plan your move into new premises in enough time to allow these works to take place.
Remember, once your lease is over you will lose the right to access the building, so won’t be able to complete works yourself.
If your surveyor advises you to complete some work and to negotiate some of the claim, a dilapidations claim will also overrun lease end and you may need to make financial provision for a settlement.
If your landlord is organised, they will send you a schedule of dilapidations well before your lease ends, detailing the work they believe is required under the lease.
If you decide not to complete all of the work, or you decide to complete no work at all, you can start negotiating a financial settlement with your landlord at any time, whether before or after lease ends.
Normally though, this negotiation period starts in earnest once the lease has concluded, and/or any disrepair is known and understood.
In exceptional cases, dilapidations settlements can be negotiated in a matter of weeks by the landlord’s and tenant’s surveyors.
More commonly though, you should assume that this period of negotiation will take around three months, but be aware that much of this time will be spent awaiting the other surveyor’s response. It’s thankfully not a case of being charged three months’ worth of fees.
A complex claims can take years to negotiate. When this is the case, it brings opportunity costs, as mentioned earlier in this article.
When the process takes such a long time, you should discuss your business requirements with your dilapidations surveyor. It may be the case that paying more to settle your dilapidations liability quickly, frees you up to benefit from other opportunities that you might not otherwise have had the confidence to pursue if you needed to keep funds in reserve.
Though it may seem counterintuitive, occasionally paying more for a dilapidations settlement can be a less costly business decision in the long run.
As soon as you receive a dilapidations claim, you should speak to a specialist dilapidations surveyor, who will discuss all aspects of your dilapidations claim with you, including likely timescales.
Many different factors will come into play, including the landlord’s attitude and that of their surveyor, the likelihood that the claim might be superseded in part or in whole by future events, or whether or not the landlord intends to complete building work after the tenant has left. All of these factors will affect the time the dilapidations settlement will take to negotiate.
Your surveyor will work with you to find the best outcome for you.
For most businesses, dealing with a dilapidations claim is a rare experience, so it is not surprising that they are often unsure about the process and its requirements.
We strongly advise you to engage a specialist dilapidations surveyor, like one of our dedicated team at Harrison Clarke, so that you can benefit from our extensive experience in this area.
We will help to finalise your dilapidations claim economically, and in a way which suits you and your business.
For further guidance and useful tips and information on the range of surveying services we provide, you can read our blogs and watch our videos. These are available on our website and our YouTube channel.
Call our friendly, expert and highly qualified surveyors on 023 8155 0051, or email us at info@harrisonclarke.co. We would welcome the opportunity to help with any queries or needs you may have.
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Tim set up Harrison Clarke Chartered Surveyors in July 2017 following a series of public and private sector surveying roles, having previously worked for the University of Cambridge, Rund Partnership, Goadsby, and CBRE.
Tim has degrees in building surveying, construction project management, and business administration.
