Top 5 landlord dilapidations mistakes and how to avoid them

Dilapidation claims are a routine part of commercial property management across the UK, but they are also a common source of disputes between landlords and tenants. Many landlords weaken their position by making avoidable mistakes, from overestimating claims to failing to prepare evidence. Here are the five most common mistakes landlords make with dilapidations and how to avoid them.

Ignoring the Schedule of Condition

Prior to taking out a lease, a commercial tenant would generally instruct a surveyor to appraise the condition of the property and its decoration and prepare a Schedule of Condition with annotated photographs and videos to highlight any potential issues that may arise.

However, if the tenant fails to produce a Schedule of Condition then it would also be in the landlord’s favour to instruct a surveyor to produce one themselves. A clear document that shows exactly what kind of condition a property was in prior to the start of the lease should prevent disagreements during and at the end of the lease as to exactly what remediation works would be required.

A Schedule of Condition sets a baseline for the property’s state at the start of a lease and it is central to any dilapidations claim. Before making a claim, a landlord should review the schedule and exclude items that were already in disrepair before the commencement of the lease to demonstrate fairness in any dispute.

Overstating the claim

One of the most frequent mistakes landlords make in dilapidations claims is inflating the scope or costs of works. It is understandable that landlords want to achieve the optimum financial outcome, but dilapidations should not be seen as a backdoor to funding refurbishments or upgrades and the courts typically reject such inflated claims.

Instead, landlords should demonstrate that their claims reflect the obligations set out in the original lease and they should instruct a RICS-qualified chartered surveyor to prepare a Schedule of Dilapidations based on legitimate repair and reinstatement requirements.

Failing to inspect the property during the lease

Some landlords want to stay “hands-off” during the lease and wait until the tenant vacates the property before assessing any repair requirements. However, leaving any inspections this late may mean opportunities for early resolutions have been lost and any damage may have further deteriorated.

To avoid these issues, landlords should be proactive in protecting their property, carrying out inspections before the end of the lease and possibly serving interim schedules to help tenants address issues earlier and save on costs.

Poor communication with tenants

Some landlords choose a confrontational approach to dealing with tenants, and whilst this may be required in some circumstances, in others it can sour relations for no reason and cause disputes to escalate unnecessarily.

If at all possible, landlords should attempt to maintain open lines of communication with tenants throughout the lease, which would give each party the opportunity to air grievances and find pragmatic solutions before any escalation. This approach can keep costs down for both parties and will demonstrate an even-handed approach should any claim arise in the future.

Failing to instruct the relevant professionals

The laws and regulations around dilapidations offer many opportunities to make mistakes for even the most experienced landlords. Choosing a RICS-certified surveyor for creating a Schedule of Condition, a professional contractor to carry out any remedial works within a reasonable budget, and a law firm with experience in dilapidations for guidance should help protect landlords from any missteps that may prove costly in the future.

If you are a London commercial landlord and are looking for help in finding a reliable contracting partner for dilapidation works, call us today on 07498 727 457 or contact us online.