What are Dilapidations & Disrepair Claims?
Dilapidations are breaches by the tenant of repairing obligations in a lease, such as failing to repair the roof or to reinstate the premises at the end of a lease. Tenants sometimes assume the landlord will be responsible for large repair obligations, but this is not always the case. Repair obligations are usually stipulated in the tenancy agreement, so it is important to seek advice before signing a lease if you are unsure what responsibilities you will have, so as to avoid costly implications later down the line.
Types of repairing obligations
- Full repairing obligation - this puts responsibility for maintenance and repair of the entire building on the tenant irrespective of the condition at the start of the lease.
- Internal only obligation - the tenant is only responsible for the maintenance and repair of the interior of the premises. In this case, the landlord often covers ongoing costs of repairing the exterior or structure by levying a service charge.
Where there is disrepair the landlord will instruct his surveyor to prepare a document setting out the disrepair, and the remedial works required, which is known as a Schedule of Dilapidations. The type of schedule depends on when it is served in relation to your lease term:
- A schedule served during the lease is an “interim” schedule
- A schedule served in the last three years of the lease is known as a “terminal” schedule
- A schedule served at the end of a lease is known as a “final” schedule. In this situation, the lease has come to an end meaning the tenant will not be able to carry out the repairs because he will no longer have any right of occupation. The landlord can bring a damages claim for the cost of repair, as well as additional losses such as rent, service charges and rates
The landlord can enforce repairing obligations against the tenant in four ways:
- A claim for damages and/or an order carrying out the repairs
- An order to gain possession of the premises on the grounds that the tenant is in breach of the lease
- By carrying out the work themselves - the landlord is only likely to do this after the end of the lease and will then look to recoup the costs from the tenant
- The landlord also has a right to access during the lease to carry out repairs if the tenant does not do so
How to challenge dilapidations
There are ways in which a tenant can look to reduce the amount of the landlord’s claim, whereby the tenant should instruct a surveyor to negotiate down the Schedule of Dilapidations.
At the end of the lease, where the landlord does not carry out the work, there is a legal limit on the value of a landlord’s claim, known as the “statutory cap on damages”. Damages claims can be complex and require expert advice and specialist input. We can advise on these.
There is also additional protection for tenants with more than three years left on the lease, meaning unless the disrepair is serious, the landlord often leaves the claims until nearer the end of the lease.
The best way a tenant can limit the dilapidations liability is by restricting the repairing obligations in the lease before taking the tenancy, or by limiting the repairs to the maintenance of the property in its existing condition. To do this, you would need to include a ‘Schedule of Condition’ in the lease.
Landlords and tenants will also need specialist input from surveyors and we have good contacts with a number of firms. Most dilapidations disputes are resolved by agreement after negotiations between the parties’ advisors so taking specialist advice is key, and can save parties a great deal of money.