When a lease on a commercial property comes to an end, most businesses focus on the excitement of the new space and give little thought to the old one. That’s a mistake. Dilapidations, the repairs and reinstatement works a landlord can require before accepting a lease back, can turn into one of the most expensive surprises of a commercial move if they’re left until the last minute.
What Are Dilapidations, Exactly?
Dilapidations refer to the condition a tenant is contractually obliged to leave a property in at the end of a lease. Most commercial leases include a “reinstatement” clause requiring the tenant to remove alterations they’ve made and return the space to its original state, along with a general repairing obligation to keep the property in good condition throughout the tenancy. When a lease ends, the landlord (usually via a surveyor) issues a schedule of dilapidations setting out what needs fixing or reinstating, and the associated cost.
Why Businesses Get Caught Out
The most common mistake is simply not reading the lease closely enough at the outset, or forgetting the reinstatement obligations years later when the business has changed, expanded, or fitted the space out differently. A business that installed partition walls, custom lighting, or bespoke flooring may be required to strip all of it out and restore the original layout, even if the current tenant would benefit from those changes.
The second common mistake is leaving dilapidations until the last few weeks before the lease ends, when there’s no time to plan the works properly or shop around for competitive contractor quotes, driving up costs at the worst possible time.
Start Reviewing Well in Advance
Ideally, dilapidations should be reviewed twelve to eighteen months before the lease expires, not weeks. This gives enough time to get an independent assessment of likely costs, budget for the works properly, and negotiate with the landlord if there’s any ambiguity in the lease wording. It also gives you time to decide whether it’s more cost-effective to carry out the works yourself or negotiate a cash settlement with the landlord instead, which is often a legitimate and quicker alternative.
Get an Independent Survey
Landlords’ schedules of dilapidations are not always reasonable, and costs quoted can sometimes be inflated. Commissioning your own building surveyor to review the schedule and challenge unreasonable or unsupported items can save a significant amount of money. It’s also worth checking whether any of the items claimed relate to fair wear and tear, which a tenant generally isn’t liable for, rather than genuine damage or unauthorised alteration.
Coordinate Dilapidations With Your Move
Trying to manage dilapidations works and a new office fit-out at the same time can be logistically difficult, particularly if staff, IT systems and furniture are moving between the two. Planning both processes together, rather than treating them as separate projects, avoids duplicated effort and helps ensure nothing falls through the cracks during a busy period.
Don’t Forget What You’re Taking With You
Dilapidations planning naturally overlaps with deciding what fixtures, fittings and furniture will move to the new premises and what will be disposed of. Items that count as tenant’s fixtures under the lease may need to be removed regardless of whether you want to keep them, so it’s worth clarifying this early rather than assuming everything is yours to take or leave as you please.
Document Everything
Photograph the property thoroughly before handing back the keys, ideally comparing against a schedule of condition from the start of the lease if one exists. This evidence is invaluable if a dispute arises later over what condition the property was in when you took it on versus when you left.
Getting the Right Support
Dilapidations sit at the intersection of property law, surveying and practical project management, which is exactly why so many businesses find them daunting. Bringing in the right support early, whether that’s a surveyor, a solicitor, or a project manager experienced in commercial relocations, tends to pay for itself many times over by avoiding inflated claims and last-minute scrambling.
If your business has a lease coming to an end and you’d like help planning both the dilapidations process and the move itself, get in touch with our team for a straightforward conversation.