Dilapidation Works

Typical scope of dilapidation works

The scope depends on the repairing obligations in the lease. In a typical full repairing and insuring lease, the tenant is responsible for keeping the premises in repair throughout the term and handing them back in that condition at lease expiry. Works usually fall into three main categories — repair, reinstatement and redecoration — together with clearance and yielding up.

• Repair of deteriorated elements — roof coverings, rainwater goods, windows, floors and finishes.
• Reinstatement of tenant alterations, taking the premises back to the original layout where required.
• Redecoration to the standard the lease specifies, usually to a professional or institutional standard.
• Servicing, testing and compliance works where the lease places these obligations on the tenant.
• Clearance of chattels, rubbish and dilapidated fixtures to achieve yielding up.

Specific items usually appear in the schedule of dilapidations, which lists each breach, describes the works required and estimates the cost.

Who carries out dilapidation works

In most cases the landlord's surveyor identifies the works and the tenant chooses whether to do them before lease expiry or negotiate a financial settlement. If the tenant carries out the works, they will usually appoint their own contractors, but the landlord may require approval of the specification and workmanship. If the works are not done before the lease ends, the landlord may carry them out and seek to recover the cost as part of a dilapidations claim.

Works versus payment in lieu

Not all dilapidations matters result in physical works. In many cases the parties agree a financial settlement — a payment in lieu of repairs — where the tenant pays an agreed sum and the landlord takes responsibility for the works, or decides not to carry them out at all.

This is particularly common where the landlord intends to refurbish or redevelop the premises after the tenant leaves. In those circumstances Section 18 of the Landlord and Tenant Act 1927 may cap the tenant's liability, because the landlord cannot recover more than the actual diminution in the value of the reversion caused by the tenant's breaches.

Jervis v Harris clauses

Some commercial leases contain a Jervis v Harris clause, which gives the landlord a contractual right to enter the premises during the term and carry out repair works if the tenant fails to comply with a notice to repair. The landlord can then recover the cost as a debt, rather than as damages.

This route bypasses the usual dilapidations process and the protections that Section 18 would otherwise provide. For a full explanation, see the Jervis v Harris clause guide.

Planning and executing the works

Dilapidation works need the same discipline as any other building project. Rushing the tender, starting late, or leaving the specification ambiguous all inflate the final cost — and often leave items open for the landlord to re-claim after the lease has ended.

• Review the lease well in advance to understand the scope of required works.
• Cross-check licences to alter to confirm what actually has to be reinstated.
• Tender competitively where the works are substantial — a rushed single-tender job usually costs more.
• Sequence external, internal and services works sensibly to avoid abortive costs.
• Allow for contingencies, access arrangements and any occupier co-ordination needed.
• Keep dated photographs and receipts as evidence of what has been done.

How a surveyor helps

A chartered building surveyor is not just a defect-spotter. On a dilapidation-works project the surveyor's job is to align the lease, the scope, the cost and the evidence so that the works actually discharge the liability.

• Advising on the scope and cost of works against the lease obligations.
• Negotiating the specification with the landlord's surveyor before works start.
• Challenging over-claimed items in a landlord schedule before they are priced.
• Procuring competitive tenders and supervising the works where required.
• Documenting completion and handover so the landlord has limited ability to reopen items.