This is a phrase we hear all the time from commercial tenants, in disbelief that their landlord is asking them to pay money to repair or refurbish a property when they leave – especially if the property is in better condition than it was at the start of the lease. Unfortunately, even if you give the property back in better condition than you took it on, your landlord might still have a valid claim against you.
All leases are pretty complex documents, and commercial leases can be the worst of the bunch. They’re usually filled with legal jargon, some of it deliberately designed to confuse you. But if you don’t fully understand the wording of your lease then there’s a real danger that you’ll be taking on unexpected liabilities. That’s why we always recommend that you get proper legal advice before signing a lease, even if you trust your landlord. After all, a couple of thousand spent on the proper advice can pay dividends across the course of the lease and at the end. This often saves tenants many times the fees they paid thanks to the reduced liabilities.
At the end of the lease, your landlord or their surveyor will inspect the property and decide whether you’ve kept it in the condition referred to in the lease. This is why you need to read the lease very carefully before you sign it. If the lease requires you to have kept the property in ‘good and substantial repair’, then you have to be aware that this is a high standard, and will be measured against the condition of each element when it was built or made – not when the lease began. We know, that’s not entirely fair, but it’s very common.
There are ways to change the lease so that it refers to the condition of the property at the lease commencement. This can significantly reduce the tenant’s liability under a commercial lease. We have a few videos on a photographic schedule of conditions that will give you some great information on this.
Unfortunately, unless you’ve modified the repairing obligation at lease commencement, it really doesn’t matter if the property is in better condition now. If the lease says you have to keep it in good and substantial repair, you have to put it into good repair first, even if it isn’t at lease commencement. It sounds horrible, but this is one of the basic tenets of dilapidations law, and it’s one of the worst-kept secrets of the commercial property world.
Even if you’ve managed to limit your repairing liabilities by using a photographic schedule of condition (or something similar), your lease might still require you to redecorate the property before handing it back to your landlord. This clause is there to help landlords reduce void periods while they redecorate between tenants. If you’re trying to limit your repairing liability you should also look to limit your liability to redecorate, so that you don’t have to improve your landlord’s property if you don’t want to.
On many industrial, retail and commercial properties, commercial lettings agents will advise their landlord clients that a property will be easier to let if it’s open plan. And while you might have put up some walls to make some offices or a staffroom, there’s no guarantee that the future occupiers will love your layout enough to keep it. That’s one of the reasons landlords are able to claim for the cost of removal for any alterations you made during the lease term, even if they made the property more useable in your opinion.
Most commercial leases will have a provision to make sure you run and maintain the property in accordance with the law. That might seem like a fairly obvious thing to state, but it’s in there anyway. Because of this, if the landlord identifies work that is required by statute that you should have completed, then they might have a valid claim against you. Claim items under this heading are usually minimal, but they can still be included.
Of course, that’s all well and good – but what do you do now? It can be incredibly worrying to get a dilapidations claim from your landlord, especially when you thought you’d taken good care of the property. That’s why you need an expert on your side. At Harrison Clarke, we have a team of specialist dilapidations surveyors who can provide expert help and advice. Thanks to our thorough knowledge and understanding, we can advise you on strategies to minimise the cost of your dilapidations claim. We can also help negotiate dilapidations claims of any size, from less than £20,000 to over £2m. Just give us a call on 023 8155 0051 to find out more.
We also have a range of videos talking through various aspects of Dilapidations. You can access them via our website or our YouTube channel.
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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.
