At the start of a tenancy, whether for a residential or commercial property, it is essential to record the condition of the property.
This process is called a Schedule of Condition and is a way for landlords and tenants to record the condition of the property and protect themselves and their interests.
The Schedule of Condition can then be compared with a Dilapidations report that refers to breaches of lease covenants during the term of the tenancy or when the lease ends. These breaches may be the result of mistreatment of the property or lack of maintenance or repairs that are required by the lease.
It may also be necessary, at the end of a lease, to reinstate alterations that have been made during the tenancy. Unless the condition of a building has been recorded correctly these dilapidations costs can often be a shock to the tenant who receives a schedule of dilapidations from their landlord.
A Schedule of Condition records the condition of a property on a particular date that can then be used as a benchmark against which its condition can be assessed in the future and any changes identified.
Schedules of Condition can be prepared under the instruction of a landlord, a tenant, a contractor, a neighbour or anyone who has a vested interest.
A well prepared Schedule of Condition will provide evidence to inform negotiations concerning the proportion of costs that ought to be payable by the tenant at the end of the term to settle a claim for damages for dilapidations.
Having a Schedule of Condition prepared by surveyors at Overill Associates will help to give it greater weight if there are subsequent claims or negotiations. Overill Associates will also agree with the other party that the Schedule is a fair reflection of the condition of the property when it is prepared.
A Dilapidations report is a report on the condition of a property at a given point in time. It records any existing damage and the state of any particular aspects of the property.
At the end of a lease, disputes can arise regarding the condition of the property and whose liability it is to carry out any repairs, redecoration or reinstatement works. This is a complex area of landlord and tenant law and there is significant dilapidations case law that can influence the outcome of any dispute.
The issue of dilapidations is rarely straightforward. Overill Associates can act for either the landlord or tenant or an interested third party and draw up an accurate Dilapidation report that will protect the interests of their client at lease / tenancy expiry.
Overill Associates surveyors are able to write a Dilapidations report whilst acting for either the landlord or the tenant that will provide professional advice tailored to protect our client’s interest.
The landlord needs to ensure that his property is maintained properly and should ensure proper dilapidations practice by warning tenants in advance of neglect. By doing this correctly they can reduce risk to the asset value of the property and help prevent any problem becoming more extensive. This is best achieved by the service of an interim schedule of dilapidations that, although more limited than a final schedule, will usually focus the attention of the tenant on existing problems.
A final Dilapidations report will identify items of disrepair to be made good by the tenant in order to protect the asset value to the landlord at the expiration of the lease. Where the tenant has not complied with his repairing obligations, the report can often form the basis of a financial claim by the landlord.
Tenants are sometimes presented with very large dilapidations claims by their landlord at or very near to the expiry of a lease. In such circumstances, the validity of the landlord’s claim should be investigated with reference to:
- The specification and pricing of works involved;
- The scope of repair obligations undertaken by the tenant, and
- The loss in value of the reversion.
When a claim is submitted in good time prior to lease expiry, it is sometimes beneficial for the relevant repair works to be carried out less expensively by the tenant.
Overill Associates can act for either the landlord or tenant or an interested third party and draw up an accurate Schedule of Condition or Dilapidations report that will protect the interests of their client at lease / tenancy expiry.
Navigating a dilapidations claim goes much further than the schedule of dilapidations. It is the skill of the dilapidations negotiator that ensures success.
Overill Associates are experienced dilapidations negotiators and support our client by:
- Providing initial dilapidations estimates;
- Arranging a schedule / survey of dilapidations;
- Interpreting the lease in relation to dilapidations;
- Arranging for any dilapidations works to be undertaken;
- Advising on the implications of dilapidations legislation including Section 18 of the Landlord & Tenant Act 1927;
- Advising tenants whether to carry out the works within the dilapidations schedule;
- Advising either landlord or tenant as to the tactics / timings to employ;
- Negotiating the dilapidations claim;
- Advising on the dilapidations protocol, and
- Preparing Section 18 valuations that can have the effect of significantly reducing a tenant’s dilapidations liability.