Harrison Clarke are leading chartered surveyors in the Hampshire area. In this article, we look at the purpose of an interim schedule of dilapidations. Although there are many elements involved with an interim schedule of dilapidations, understanding the correct procedures to follow will ensure the right choices are made.
What is an interim schedule of dilapidations for?
The main purpose of serving an interim schedule of dilapidations is to ensure security of the value of a landlords’ property interest. This is done by enforcing lease covenants during the lease term.
An interim schedule of dilapidation will usually be served by a solicitor as a repairs notice, and is normally suitable when there are three or more years left to run on a lease. After this time, a terminal schedule of dilapidations may be more suitable.
What is included in an interim schedule of dilapidations?
We would normally expect an interim schedule of dilapidations to include a summary of applicable lease covenants and an itemised list of breaches of the lease. Breaches of the lease that can be included typically relate to those which, if not addressed, would lead to accelerated degradation of the building’s fabric or services.
Therefore, we would typically expect an interim schedule to be focused on weatherproofing issues, mechanical leaks including disrepair expected to cause leaks in the near future, or safety issues such as dangerous electrical installations. Examples of weatherproofing issues might be roofs which are at the end of their lives, excessively damaged brickwork pointing, or a tenant’s failure to redecorate external timber and metalwork.
An interim schedule of dilapidations might include suggestions on suitable remedial works. Alternative methods of remedying breaches however might not be available, therefore it is important these should only be considered a guide for the tenant.
Importantly, in most interim schedules of dilapidations, financial damages are not suitable as a remedy and so it would be inappropriate to include cost of suggested works. A landlord might instead seek Specific Performance. This means the tenant will be required to complete any remedial works.
What else can an interim schedule of dilapidations be used for?
Sometimes a tenant seeks to assign their lease which provides a good opportunity for landlords to take stock of their property’s condition and decide to issue an interim schedule of dilapidations. This will help increase the likelihood of the outgoing tenant being motivated to cooperate with the landlord.
Furthermore, any incoming tenants could potentially be weak covenants as the quality of the tenant isn’t always understood by the landlord, so an interim schedule of dilapidations can help ensure the building is being maintained to the expected minimum standard. In this scenario, a landlord may decide to make completion of the works a condition of the lease assignment, either by the incoming or outgoing tenant.
If a tenant wishes to surrender their lease, an interim schedule of dilapidations would need to be prepared. In reality, in this scenario this is more like a terminal schedule which is a different document. This is not a true interim schedule, however it will on occasion be branded as one and can be used as a negotiation tool for agreeing a surrender premium.
How much does an interim schedule of dilapidations cost to prepare?
If you are looking for a chartered building surveyor to prepare an interim schedule of dilapidations, the cost for this is really dependent on a number of varying factors.
These include the size and type of the property, and whether the landlord is only seeking to address some key issues, rather than requiring a whole building inspection. We will also look at other relevant factors like whether drone photography is required, or the property’s geographical location for example.
The typical cost is not dissimilar to that for a terminal schedule as there is little difference in schedule preparation, travel and inspection time.
The majority of tenants will have a contractual obligation to reimburse the cost of the preparation and service of a schedule of dilapidations to the landlord.
The schedule has been prepared – what next?
So now your schedule has been prepared, what can you expect next? The typical next steps are for a solicitor to serve the interim schedule on the tenant as a repairs notice. Once served, you might need some more of your surveyor’s time to discuss or negotiate with the tenant to agree a package of suitable remedial works and ensure the works are inspected upon their completion.
If the tenant does not complete the work within a timescale specified within the lease, the landlord may be able to enter the property to complete the work themselves and recharge the tenant for doing so after. A lease clause allowing for this is known as a “Jervis vs Harris” clause. The possibility of this should be discussed with your solicitor and surveyor.
I need an interim schedule of dilapidations
If you need an interim schedule of dilapidations, Harrison Clarke has an expert team of specialist dilapidations surveyors who can help you. They can be contacted on 023 8155 0051 and we look forward to speaking with you soon.
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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.
