Viewpoint: What should a tenant consider before exiting a property?

Normally, prior to a lease end or lease break, the tenant will receive a schedule of dilapidations from their landlord, outlining their expectation for work to be carried out before exit, ostensibly to return the building to the state it was in prior to the tenancy.

Whether a tenant chooses to do that work, in full or in part, or simply negotiate a cash payment, will depend on the terms of their lease, their financial position and their appetite for a fight.

Where to start

First, dig out the original lease and find out what liabilities were agreed back when it was signed. Hopefully enough thought was put into the dilaps at that stage, and the building has been maintained and nothing altered without landlord consent, so as not to put the tenant on the back foot.

An experienced building surveyor with detailed knowledge of dilapidations law will be able to advise on undertaking a project to return the building to the stated level, or will negotiate on your behalf a sum that relieves you of those liabilities in part, if not in whole.

The value of the landlord’s claim, and the cost of the final payment, will depend on the negotiating position based on the terms of the lease, and your surveyor’s ability to employ a variety of arguments to keep cash in your pocket, not your landlords.

What it could mean

These are not insignificant sums of money. We work for a client nationally who, over the last 18 months, has faced substantial dilapidation claims for seven buildings, all of which we have successfully fought and brought payments down by a total of £830,000.

Very few tenants get out of their premises without having to fork out anything at all, dilapidations are as certain as death and taxes. So it is wise to factor a savings scheme into the annual budget to cover those future liabilities and, of course, make sure you have a dilapidations expert on hand when agreeing terms on your new building too.