If you’re leasing or managing a commercial property, you’ve probably heard the term dilapidation – but what does it mean? And more specifically, what does it mean for your responsibilities as a tenant or a landlord?
At Presence & Co., we regularly support clients across the UK in understanding and managing dilapidations in commercial leases. Whether you’re nearing the end of a tenancy or just starting a new lease, getting to grips with your dilapidation obligations can save you time, money, and hassle.
In this blog, we’ll explain exactly what a dilapidation is, how it affects both tenants and landlords, and how to deal with dilapidations effectively.
What does ‘Dilapidation’ mean?
In commercial property, dilapidations refer to the breach of lease obligations by a tenant, more specifically the condition of the premise. These breaches often relate to repairs, maintenance, redecoration and reinstatement of alterations.
Essentially, its about returning the property in the condition it should be based on the terms in your lease agreement.
Dilapidations usually becoming an issue at the end of the lease, but landlords are entitled to raise concerns at any point during the term if there are any significant breaches discovered. This is why its so important to understand your commercial lease repairing obligations.
Common types of Dilapidations in Commercial Properties include:
- Repairs – Tenants are often responsible for maintaining the property to a good standard. This might include fixing leaks, repairing any damaged walls or ceilings or any other broken fixtures.
- Redecoration – Many commercial leases require tenants to redecorate the property either regularly (every five years) or at the end of their lease. Failure to comply can lead to a dilapidation claim.
- Reinstatement – If a tenant has made alterations to the layout or fixtures, for example removing walls, adding signage, or installing mezzanine floors, the lease may require these changes to be undone before leaving.
- Cleaning and Clearance – Basic cleaning and rubbish removal can fall under dilapidations obligations, if the lease states that the property must be left clean and tidy.
Who Is Responsible for Dilapidations?
In most cases, the commercial tenant is responsible for resoling any dilapidations based on the terms of the lease. If they don’t complete the necessary work before the end of the tenancy, the landlord can claim compensation for the cost of carrying out the repairs.
However, tenants are entitled to:
- Dispute claims they believe are unreasonable
- Seek independent advice from a surveyor or legal expert
- Carry out works before the lease ends to avoid or reduce a claim
At Presence & Co., we help tenants review lease obligations and navigate the dilapidations process to avoid excessive or unjustified claims.
How Can Landlords Protect Themselves?
While tenants typically handle repair responsibilities, commercial landlords should also understand their rights and limits. For example:
- Claims must be reasonable and reflect actual loss
- Landlords cannot profit or claim for improvements beyond the tenant’s obligations
What is a Dilapidation Claim?
A dilapidations claim is the legal and financial process where a landlord seeks compensation from a tenant for failing to return the property in the agreed condition.
A claim may include:
- Costs of repairs and reinstatement.
- Professional fees, for example, surveyors or legal costs.
- Loss of rent during repair works.
Many claims are settled without court proceedings, often by a financial settlement, where the tenant agrees to pay a negotiated amount rather than carry out the work themselves.
Here is how to avoid Dilapidation Disputes:
For Tenants:
- Review your lease thoroughly before signing
- Negotiate a Schedule of Condition at the start of the lease
- Carry out regular maintenance and repairs
- Commission a dilapidations assessment before lease end
- Get professional advice early
For Landlords:
- Maintain clear and realistic expectations
- Issue schedules in good time
- Work with experienced surveyors
- Be prepared to negotiate settlements reasonably
Dilapidations can be one of the most complex areas of commercial property management, but with the right knowledge and support, they don’t need to be daunting!
Whether you are a tenant nearing the end of your lease or a landlord preparing a claim, understanding your legal obligations and financial exposure is essential.
At Presence & Co., we offer clear, expert guidance on dilapidations for commercial tenants and landlord. From reviewing lease terms to managing schedules and negotiating fair settlements, we’re here to protect your interests every step of the way.
