Here at AWH, there are certain terms that we use on a daily basis and as property management experts we can take them for granted. So we thought we’d start breaking some down into layman’s terms to explain what they mean and how they affect business owners like you.
We act for both landlords and tenants, providing dilapidation reports and advice to occupiers so we thought this was a good place to start.
What does dilapidations mean?
‘Dilapidations’ are breaches of covenant to repair a building contained in a lease. They are disrepair and defects which tenants are required to deal with or pay to have remedied when they vacate the property that they have been leasing. Obvious examples are a leaking roof or a broken window, but these breaches can take many forms.
It is common for a landlord to serve notice to tenants towards the end of a lease asking them to carry out repairs or reinstatement works. This list of works is called a ‘schedule of dilapidations’.
Dilapidations are often considered to be insignificant by tenants when leaving the premises which is a dangerous assumption. The liability to repair can have serious financial implications and we strongly recommend that tenants seek advice from a Chartered Surveyor before entering into a lease or when a schedule of dilapidations has been served to them. Contact us today if you need a trusted Chartered Surveyor to work with.
Why do you need a building survey?
We would advise any prospective tenant to commission a survey and report before signing a property lease. You may need a traditional building survey but often a Schedule of Condition should be appended to a lease and this gives tenants insight into any potential dilapidations liability that might exist.
Organising these before signing a lease could save you thousands in future costs. It will highlight to tenants what repairs they might face and should significantly reduce the risk of tension should a landlord request payment for work at the end of the lease that isn’t deemed as acceptable in a Schedule of Dilapidations.
Which report format is best for me?
All building surveys involve the chartered surveyor undertaking a full inspection of the property, but it is ultimately your decision which report format is most suitable.
Schedule of Condition – it is crucial that the condition of a property is accurately recorded when a Schedule of Condition is appended to a lease. What’s included:
- A thorough inspection of the building from top to bottom, both internally and externally, to note the present condition of the property at that precise moment in time. Photos are useful but not sufficient.
- A written description of the building and all major elements and components with a written statement detailing the condition of each element.
- No dilapidations liability advice is included.
Dilapidations Liability Report – differing to a Schedule of Condition, this survey begins with a desktop review of the lease. What’s included:
- Focus is on the lease covenants relating to repair, redecoration and reinstatement.
- An outline of the potential dilapidation’s liability costs the tenant may be obligated to undertake based on the lease covenants compared to the current condition of the property.
A Combined Approach – a third option is to combine one or other of these reports with a traditional building survey report that states the overall condition of the building. It is similar to a home buyer’s report but bespoke for the individual property a tenant wishes to lease.
But a survey won’t necessarily report in detail on everything so any limitations should be agreed upon and documented within the report. Timescales and likely costs for future repair and maintenance work can be included in the survey. When a tenant is about to sign the lease on a new property it is worth asking the building surveyor to review the clauses that relate to dilapidations for final peace of mind.
For more information about dilapidations, claims and how to avoid any associated risks, click the button below and complete the form to download our dedicated article:
Or for any other enquiries please contact the team at AWH today on 0800 071 5517 or firstname.lastname@example.org.