Office Fit-Out Reinstatement

What reinstatement means on an office

Office space is delivered in one of two states. CAT A is the landlord or developer finish — raised floor, suspended ceiling grid, lighting, primary mechanical and electrical services, and base finishes. CAT B is the tenant fit-out installed on top of it, covering partitioning, meeting rooms, joinery, kitchenettes, branded finishes, and IT infrastructure.

Reinstatement normally means removing CAT B and returning the floor to CAT A. That is straightforward to describe and less straightforward to price, because the CAT A condition the tenant must return to is defined by the lease and the licence rather than by what happens to be there. The distinction is set out in the guide to CAT A and CAT B fit-out.

The works are more than demolition. Removing partitioning leaves marks and damage to ceilings, raised floors, and finishes. Removing supplementary cooling leaves penetrations and redundant services. Removing kitchenettes leaves drainage and water connections to cap off. Making good is a substantial part of the cost.

Where the liability comes from

Three documents create and define the obligation, and they must be read together.

1. The lease — the yield-up covenant, the alterations covenant, and the repairing covenant. These set the baseline standard on return.
2. The licences to alter — each licence records specific works and states whether they must be removed, and what triggers that obligation.
3. The schedule of condition, where one exists — this records the condition accepted at the start of the term and limits the standard the tenant must return to.

The licence wording is decisive. Automatic reinstatement requires removal regardless of what the landlord wants. Reinstatement on notice requires removal only where the landlord serves notice within the period the licence specifies. Where notice is required and none is served, the obligation does not arise at all.

Works carried out without a licence sit outside this framework. They breach the alterations covenant, and the tenant loses the benefit of any agreed reinstatement position. Unauthorised alterations are commonly the weakest part of a tenant position at lease end.

What a reinstatement scope covers

A typical office reinstatement scope on a fitted floor covers the following.

• Removal of partitioning, glazed screens, and demountable systems, and making good the ceiling grid, raised floor, and perimeter finishes.
• Removal of joinery, tea points, and kitchenettes, including capping off water and drainage connections.
• Removal of supplementary cooling installed for server rooms and meeting rooms, and making good penetrations and builders work.
• Removal of structured cabling, containment, and redundant small power installed for the tenant layout.
• Reinstatement of the lighting layout and ceiling grid to the base-build arrangement.
• Reinstatement of the raised floor, replacing damaged or missing panels and reinstating the original pedestal layout.
• Alterations to the sprinkler and fire detection layout, returning coverage to the open-plan base-build design.
• Redecoration and replacement of floor finishes to the standard the lease requires.
• Removal of branded finishes, signage, manifestation, and security installations.

What reinstatement costs

Reinstatement is priced by area and specification. The variables that move the figure are the extent of the fit-out installed, the standard required on return, and whether the works touched structure, services, or fire compartmentation.

A small suite with light partitioning and a tea point runs to tens of thousands of pounds. A full floor plate with meeting rooms, a fitted reception, server room cooling, and a comprehensive cabling installation commonly reaches six figures. Larger multi-floor occupations run higher again.

Preliminaries and access are a significant part of the cost and are frequently underestimated. Works in an occupied building are carried out outside normal hours, with restricted access, protection to common parts, and waste removal through a shared service route. On a central London building these constraints can add materially to the figure. The wider costs position is set out in dilapidation costs.

Reducing a reinstatement claim

The opening demand from the landlord is rarely the recoverable figure. Each item is tested against the lease and against statute.

• Test each alleged item against the licences to alter actually granted. Items outside a licence may not carry a reinstatement obligation at all.
• Check whether reinstatement operated automatically or only on notice, and whether valid notice was served in time.
• Reference the schedule of condition item by item to remove pre-existing wear and damage from the recoverable scope.
• Apply the section 18 cap against the diminution in reversionary value.
• Test supersession against the actual intentions of the landlord for the floor, evidenced by marketing, planning applications, and works to adjoining floors.
• Price the works independently rather than accepting the costings attached to the demand.

When to start

Reinstatement planning should begin at least eighteen months before lease expiry, and earlier on a large floor plate or a multi-floor occupation.

Starting early preserves options. The tenant can price the works competitively, carry them out during the term rather than paying damages, test supersession while the intentions of the landlord are still forming, and negotiate a settlement from a position where carrying out the works remains realistic. A tenant who begins three months before expiry has lost all of those options and is negotiating on price alone.

The strategic sequence is set out in dilapidations strategy, and the mechanics of the claim in the guide to the terminal schedule of dilapidations.

The position for landlords

For a landlord, reinstatement protects the letting position of the floor. A floor returned in a fitted state to a specification the next tenant does not want carries a cost and a void, and the reinstatement obligation is the mechanism for recovering that.

The position is protected at the point of consent rather than at expiry. A licence that defines the works precisely, attaches accurate drawings, and sets a workable notice period gives the landlord a claim that can be evidenced. A licence with a loose definition of the permitted works and outline drawings does not, and the argument at lease end becomes about what was approved rather than about what is owed.

Where the intention is to refurbish the floor in any event, the supersession position should be understood before the demand is issued. A claim for works the landlord was always going to carry out is not recoverable, and pursuing it damages the negotiating position on the items that are.