Dilapidation Tenants

Our team has acted for the tenant in approximately half of our instructions. 

When we assist tenants, we follow the following process.

1.      Check that the Landlord is not undertaking a change of use or demolishing the property, and whether there is a market for the reinstated property.

2.      Reviewing the schedule and seeing what liability actually is.

3.      From that, having the works priced.

4.      Negotiating from there.

5.      If the landlord does not agree to a reasonable settlement. Start doing the work.

6.      It's amazing how quickly a landlord would rather have the cash offered rather than have the works undertaken.

7.      Settle.  After all, most tenants are not in the business of building works. So why do you undertake it when you can pay up without the risk and hassle of undertaking the works?

8.      We have a specialist S18 valuation consultant who can assist where required with S18 of the Landlord and Tenant Act of 1927 S18. Where S18, caps damages for repair covenant breaches (dilapidations) at the end of a lease to the actual diminution in value of the landlord's reversionary interest. It prevents landlords from recovering more than the actual loss to the property's value.

Our recommendation is to start considering dilapidation a year out from the end of the lease. This gives our clients options going forward, along with information on the cost of staying put or moving.

Landlords will often appear to negotiate in the hope that the tenant runs out of time and therefore is unable to undertake the works before the lease ends.  Therefore, putting the landlord in a stronger negotiating position.

HJA policy is to make it clear to the landlord that if they do not reach a settlement, the tenant will undertake the works.

It is amazing how often a landlord is willing to settle if a contractor is on site for a week. 

We take the view that it is safer for a tenant to settle a claim for cash rather than carrying out the risk and management time of undertaking the reinstatement works. 

The risk of allowing the Landlord to undertake the works without a settlement is that the landlord can choose an expensive contractor, and if any latent defects are found, then these can be added to the claims.

Therefore, it is in the tenant's interest to settle for cash prior to the end of the lease