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Dilapidations for Tenants: Do you Know What you are Signing up For?

If you or your business is occupying leasehold premises, the chances are that the lease will contain a multitude of covenants and obligations. All too often, tenants fail to grasp the implications of these until it’s too late.

Below are a few of the more common ways that tenants can help themselves either before or during the lease.

    • Rent is payable regardless of whether it is demanded or not. Do not wait for an invoice even if that is what you are used to. You could end up on the wrong end of enforcement proceedings or having to pay a penalty.

 

    • Alterations that you might want to carry out to make the premises more suitable for your business may not be allowed. You may also have an obligation to remove these at the end of the lease, which could be expensive.

 

    • Most leases will contain an obligation to keep a property in repair. Years of case law has determined that this means putting the property into repair even if it is in disrepair.

 

    • Your landlord may have the right to enter your property to carry out remedial work (at your cost) before the end of your lease if these are left unattended.

 

    • The premises will be for your occupation only. Do not share these or sublet them without checking that this is permitted.

 

    • If you have an opportunity to break, this will need to be planned for well in advance. The lease is likely to contain many conditions which will need to be fully complied with.

 

    • Consider whether a break clause is required. The chances are you will be paying a premium for the benefit of the potential flexibility.

 

    • If you intend to leave the premises when the lease expires, act early to determine the most appropriate way of addressing your dilapidations liability. An early financial settlement with the landlord may be the most cost-effective but bear in mind the likely future of the property. If, for example, the landlord is intending to redevelop or change the use and or nature of the property, it is possible that your liability is significantly or totally reduced.

 

If in doubt always seek advice from a specialist commercial property agent. Taking advice from a commercial building surveyor will help you assess whether the costs being claimed by the landlord under a dilapidations claim are reasonable. The team at Hicks Baker can help you avoid costly assumptions and mistakes. Call us today on 01189 596 144 or click here for more information.