Should I settle a dilapidations claim quickly?

Our team of specialist dilapidations surveyors at Harrison Clarke is often asked, “How quickly can I settle my dilapidations claim?” In this article, we explore both the benefits and drawbacks of a quick settlement, as well as what is in the best interests of both a landlord and a tenant.

Benefits of settling a dilapidations claim quickly for a tenant.

As a tenant, dealing with a dilapidations claim can be a very stressful situation, so it is no surprise to us that many tenants are keen to settle a claim quickly and there are certainly benefits of doing so.

Firstly, this provides cost certainty. This means your business does not need to hold an accrual on their books for a long period of time, so any leftover funds can be allocated elsewhere, such as being reinvested into your business.

Secondly, it can help to reduce stress for the business owners involved, allowing you to concentrate on their core business.

Reaching a quick settlement with your landlord can also give the tenant cost certainty before the landlord completes remedial work. This will mean your landlord is unable to claim additional costs from you if further disrepair is found further down the line once work starts.

Drawbacks of settling quickly for a tenant.

The benefits of a quick settlement should be balanced against the cons of settling quickly.Settling your claim quickly does not always mean you will be settling at the lowest possible sum. Future events, such as a reletting of the property, can often allow for significant parts of a claim to be superseded. Settling early will increase your risk of losing the opportunity to reduce a claim.

Settling quickly will also often rely on estimated costs for remedial works rather than competitively tendered prices. Although surveyors will do their best to accurately assess the value of works required, there are some instances where the cost of the works can be overestimated, which will result in a higher settlement sum being reachedthis can work in reverse of course, and errors could be in a tenant’s favour.

Sometimes, particularly if your dilapidations claim has come as a surprise, paying a dilapidations settlement might present difficulties in terms of cashflow. For this reason alone, we are sometimes asked to delay settlement. Even if cashflow isn’t really an issue, many companies prefer to hold funds in their own account for as long as possible so the money can be used elsewhere to generate income.

Benefits of settling a dilapidations claim quickly for a landlord.

As a landlord, how quickly a dilapidations settlement is reached is often out of your control, particularly if confronted with delaying tactics from your tenant. However, this doesn’t mean that speed of settlement isn’t a consideration.

Achieving a quick settlement can help to improve cashflow, so that any remedial works are effectively funded directly by the tenant, rather than needing you to stump up cash, to later be reclaimed from the tenant. This means your own funds which can otherwise be used elsewhere to generate income.

Early settlement is usually based on surveyors’ cost estimates. If the value of a works is overestimated, you could stand to profit from a dilapidations settlement. On the flip side, if the estimates are incorrect, you could stand to make a loss.

There can be an opportunity to be over-remunerated. A situation where this may occur can arise where a settlement agreement is reaches and you decide not to complete works before the property is re-let. This is a common situation and the main reason that dilapidations is often seen as being controversial.

Drawbacks of settling quickly for a landlord.

The main drawback of settling a dilapidations claim quickly, is that if you elect to complete necessary remedial work, you will lose the ability to reclaim the cost of unforeseen work. Dilapidations claims are almost always on a full and final basis, which means you cannot revisit them once a settlement has been reached.

Other than this, it is often in the landlord’s interest to settle a dilapidations claim quickly.

How do I settle quickly?

The best way to settle quickly is for you to engage with a driven, expert surveyor who will be able to progress matters efficiently and with a wealth of knowledge. Your surveyor should be able to present options and to explain the risks of each decision you make with your dilapidations claim.

With two parties involved, there is always an element of uncertainty as to the expectations of the other party. Therefore, it is not always possible to control the speed of your settlement with much certainty, particularly if the other side is not motivated to move quickly.

I still need help in understanding whether a quick settlement is right for me.

If you are not sure about whether settling your dilapidations dispute quickly is right for you, please call our friendly, expert and highly qualified surveyors on 023 8155 0051. We can help to advise you on the risks of your proposed approach to dilapidations and often find ourselves suggesting routes to settlement that haven’t been considered by the client. We look forward to speaking with you.

We also have a range of videos talking through various aspects of the Party Wall process. You can access them via our website or our YouTube channel

At the time of writing, we have a total of 94 reviews across Trustpilot and Google. We are proud to say that they are all 5 star ratings across the board.

Discover something you would like to know more about?

Tim Clarke, Director at Harrison Clarke chartered surveyors.

About the author

Tim Clarke,
BSc (Hons) MSc MBA MRICS CMgr FCMI

Director

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.