If your lease is coming to an end, dilapidations is one of those things that can catch businesses off guard. The claims can be significant, the process unfamiliar, and the timelines tighter than most tenants expect.
Understanding how it works, and what your obligations actually are, puts you in a much stronger position when the time comes.
What Are Dilapidations?
Dilapidations are the repairs, reinstatements, and redecoration works a tenant is required to carry out under the terms of their lease before vacating a commercial property.
Most commercial leases include repairing and decorating obligations. At lease end, the landlord has the right to inspect the property and issue a schedule of dilapidations, which sets out what they believe the tenant is liable for.
This isn’t always a straightforward list. Claims can include structural repairs, removal of tenant fit-out works, making good after partitioning or cabling, and full internal redecoration. The scope depends entirely on the lease wording and the condition of the property when you took it on.
Step 1: Review Your Lease Early
The process really starts long before your lease expires. Ideally, you should be reviewing your repair obligations at least 12 to 18 months before the end of your term.
Your lease will define what you’re responsible for. Common clauses include full repairing and insuring (FRI) obligations, which place the majority of maintenance and repair responsibility on the tenant. Others are more limited in scope.
Key things to check:
- What repair and decoration obligations are included
- Whether you’re required to reinstate any alterations made during the tenancy
- Whether a schedule of condition was agreed at the start of the lease
A schedule of condition, if one exists, is important. It records the state of the property when you moved in and limits your liability to returning it to that condition, not necessarily a better one.
Step 2: Carry Out a Pre-Lease-End Survey
Before your landlord’s surveyor arrives, commission your own independent survey of the property. This gives you an objective view of what works are genuinely required and what the likely costs are.
It also puts you in a better position to challenge any claim that overstates the scope of works or inflates costs.
A pre-lease-end survey typically covers:
- The current condition of floors, walls, ceilings, and finishes
- The state of mechanical and electrical systems
- Any alterations or fit-out works that may need to be removed or made good
- Items that were already in disrepair when you took on the property
Step 3: Receive and Review the Schedule of Dilapidations
Once your landlord has carried out their inspection, they will issue a schedule of dilapidations. This document sets out each item they consider you liable for, along with an estimated cost of works.
Landlords often issue this document towards the end of the lease or shortly after you vacate. In some cases, a terminal schedule is served during the final months of the tenancy.
Do not accept a schedule at face value. Some claims include items that aren’t covered by the lease, works priced above market rate, or repairs that go beyond what the lease actually requires. Review it carefully with a surveyor who understands commercial leases.
Step 4: Negotiate or Carry Out the Works
At this stage, you have two main options.
Carry out the works yourself. You appoint a contractor to complete the required repairs, reinstatement, and redecoration before or shortly after vacating. If the works are done to the required standard, your liability is discharged.
Negotiate a cash settlement. Rather than carrying out the works, you agree a financial settlement with the landlord. This is common where the landlord plans to redevelop or refit the space anyway, making physical works largely irrelevant.
In practice, many dilapidations cases are resolved through a combination of works and negotiation. A specialist surveyor can help you understand which route makes more commercial sense in your situation.
It’s worth noting that under the Landlord and Tenant Act 1954, a landlord’s claim is capped at the reduction in the property’s value caused by the disrepair, not simply the cost of carrying out all listed works. This is known as the Section 18 cap, and it can significantly reduce a tenant’s liability in some cases.
Step 5: Agree Final Sign-Off
Once works are complete or a settlement is reached, you’ll need written confirmation from the landlord or their surveyor that all obligations have been satisfied. Don’t vacate and assume the matter is closed without getting this in writing.
Keep records of all works carried out, including contractor invoices, before and after photographs, and any correspondence with the landlord throughout the process.
Common Mistakes Tenants Make
Leaving it too late. Starting the process six weeks before lease end is rarely enough time to survey the property, negotiate the schedule, appoint contractors, and complete works.
Not challenging the schedule. A landlord’s schedule is their opening position, not a final bill. Many items can be negotiated down or removed entirely.
Underestimating reinstatement obligations. If you’ve carried out a fit-out during the tenancy, including partitioning, raised floors, or suspended ceilings, you may be required to strip these out and return the space to its original condition. Check your lease before the fit-out is installed, not after.
Ignoring the schedule of condition. If one was agreed at the start of your lease, it’s one of the most useful documents you have. Make sure your surveyor refers to it when reviewing any claim.
How Much Do Dilapidations Cost?
Costs vary considerably depending on the size of the property, its condition, and the scope of works required. For a modest office of 2,000 to 5,000 sq ft, claims can range from a few thousand pounds to well over £50,000 in more complex cases.
Early planning, an independent survey, and proper negotiation can make a meaningful difference to the final figure.
Conclusion
Dilapidations don’t have to be a nasty surprise at the end of a lease. With the right preparation, a clear understanding of your obligations, and professional advice at the right time, most tenants can manage their liability effectively and avoid paying more than they need to.
The key is starting early and not treating a landlord’s schedule as a final, non-negotiable demand.
Speak to SJP Interiors About Your Lease-End Works
If you’re approaching lease end and need help understanding your reinstatement obligations or carrying out dilapidations works, SJP Interiors can help. We handle everything from strip-out and making good to full refurbishment, and we work with tenants across the UK.
Get in touch with SJP Interiors today to discuss your project.
