Lease-end dilapidations

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Lease-end dilapidations, commercial premises exit and make-good experts

Space-pod is experienced in ‘Lease-end dilapidations premises exit and make-good’ projects, where we help businesses to exit a leased space and return it to the landlord in the same condition as when they first entered the space at the start of their lease.

This type of work will usually include:

  • Removal of furniture & fittings throughout the unit
  • Removal of partition walls and air-conditioning units
  • Removal of old carpets and fitting of new carpeting in all office spaces
  • Returning the unit to original building fabric and original condition
  • Internal building repairs and decoration throughout
  • Deep-clean and hand-over to landlord

Lease-end dilapidations and the law

Lease-end dilapidations disputes can ultimately end up being resolved in a court of law. Therefore get advice early on from your solicitor and surveyor and protect your position in the event that the landlord eventually commences proceedings.

You need to be aware of the extent of lease-end dilapidations work you have committed to complete. This can be a complicated assessment and it’s normal to engage a chartered building surveyor, experienced in the field of dilapidations and familiar with the case law, to advise you.

Unless you have completed all the building work which the lease and any licences for alterations require of you then you should expect to receive a Schedule of Dilapidations from your Landlord. The Schedule of Dilapidations may be sent to you shortly before or shortly after the end of the lease term. If it is sent to you before the end of the lease term then the Landlord may update it at the end of the lease to reflect any changes to the premises. If the lease or any licences for alterations requires them to do so, your landlord might serve you with a notice to reinstate alterations you have made. This notice may be separate from or included within the Schedule of Dilapidations.

Even if the Landlord does not send you a Schedule of Dilapidations you still have potential lease-end dilapidations obligations and a chartered building surveyor can give you advice as to the scope and potential cost of the obligations.

If you do not complete the lease-end dilapidations works before the end of the lease term then your landlord can claim damages from you to recompense them for the adverse financial position they find themselves in, because you did not complete the dilapidations works.

Landlords should not however profit from dilapidations payments and so the amount set out in the Quantified Demand is sometimes lower than that in the Schedule of Dilapidations. This may be because the landlord intends to redevelop the premises; because the landlord intends to upgrade the premises; because a new tenant wants the premises left as they are and the terms of the new lease don’t prejudice the landlord; etc. It can therefore sometimes be very difficult to decide whether to complete the work yourselves before the end of the lease or to wait for the landlord to send his Quantified Demand. It is possible that the Quantified Demand will include sums such as loss of rent, loss of service charge, etc. if the Landlord is confident that it can demonstrate a loss caused by the time taken to complete the works which you should have completed before the end of the lease. These sums are not always payable and again a chartered building surveyor can advise you in this respect.

The Schedule of Dilapidations and Quantified Demand can also include an allowance for VAT, if the Landlord is anticipating carrying out the works and would not be able to recover VAT. In those circumstances, if you are able to recover VAT on such works then you might be more inclined to complete the works before the end of the lease term.

Source: www.rics.org

Lease-end dilapidations in commercial property can be complicated, but space-pod can help steer you through process so that you avoid expensive and time-consuming disputes with your landlord.

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