How to save money on dilapidations
When commercial tenants approach the end of their leases, many are shocked by the size of the repair and reinstatement bills presented to them by their landlords. These dilapidations claims are designed to cover a landlord’s alleged losses as a result of breaches of the lease’s repairing covenants and can be significant.
Here are five ways to minimise a dilapidation claim at lease expiry:
1. Building Survey before entering into the lease.
Tenants often view a pre-lease survey, also known as a Schedule of Condition, as an unnecessary expense in addition to all the moving and refurbishment costs. However, carrying out a survey before you enter into a lease is critical to knowing the condition of the property at the start of the lease and therefore the condition that the property should be returned to at termination.
A pre-lease survey will show a prospective tenant whether any part of the property will require immediate attention if the lease is agreed and others that may require attention within the next few years. If the survey does reveal problem areas then it may be possible to negotiate with the landlord for a reduced rent and/or a reduced repairing liability in respect to these items.
2. Carefully check your commercial property lease
Commercial leases generally contain specific clauses that detail the obligations of both landlords and tenants in regards to the maintenance and repair of the property. The lease may require the tenant to reinstate the premises to its original condition before vacating the property, or it may state the condition in which the property should be returned with specific references to the electrics, flooring, and other aspects.
It is important for tenants to understand the lease they have signed and to comply with its requirements, both in terms of maintenance during the lease period and the condition at termination.
3. Maintain a regular maintenance programme throughout the lease term.
Regular property maintenance will save you money over the course of a lease. Not only will you unearth issues more quickly and so be able to rectify them before they cascade into larger problems that affect operations, but also will not be left with such a hefty dilapidation bill at the end of the lease.
Maintenance is not only cheaper in the long term, but is also easier on cashflow and keeps the property secure and working efficiently in the short and medium term. Some larger premises may benefit from the expertise of a facilities manager, but even small workspaces or warehouses will benefit from regular maintenance reviews and a sufficient maintenance budget.
4. Only make necessary alterations and adjustments to the property
The changes a tenant will need to make to a premises will vary by their requirements, but it is useful to always consider whether an alteration is required or whether a non-permanents alternation would be sufficient.
For example, when putting up signage it is prudent to consider whether it needs to be attached to something metal that might need to be replaced wholesale when vacating the property, or whether the signage could be attached to the wall in a less permanent manner. Painting walls or laying carpets are relatively simple and low cost to reverse, but other alterations may require significant outlay to reinstate.
5. Choose your own contractor for the works
Whether the premises requires a simple redecoration at the end of the lease, or more extensive works to strip out all your alterations from desks and cabling to lighting fixtures, choosing your own contractor can save you money and minimise any dilapidations claims. Whether you are starting to think about a change of premises or you have already received a schedule of dilapidations from your landlord at the end of your lease, talking to a specialised dilapidations contractor could save you up to 40% on your bill.
When a landlord sends a schedule of dilapidations, the estimated costs for works is likely the first quote the landlord has received from a partner contractor. They have no incentive to shop around for the best quote, as they simply pass this cost onto the tenant. For the tenant, however, there are significant savings to be found.
Workspace Dilapidations is a specialist London-based dilapidations contractor. Call us on 07498 727 457 or contact us online to discuss your requirements