Dilapidations on industrial assets: The Landlord viewpoint

Dilapidations on industrial assets: The Landlord viewpoint

POSTED 28 September 2020

Under the obligations of a commercial property lease, tenants are usually obliged to maintain their premises to a good state of repair. 

There are often occasions when these obligations are not met, particularly at the end of a lease. This is particularly prevalent within industrial assets, with significant tenant alterations, disrepair and redecoration required from the operational activity. In this scenario, the Landlord is entitled to complete any necessary repair works themselves and issue the tenant with a claim for damages. There are however certain protocols that must be observed to act lawfully. The Landlord must be able to prove the following criteria:

  • Schedules of dilapidations and notices of reinstatement are issued prior to lease expiry to protect the interest of the Landlord and comply with any specific reinstatement obligations of the tenant 
  • Items in the schedule in terms of breach and required remedy are compliant with the terms of their lease
  • The costs claimed for reinstatement works are reasonable and reflective of market competitive rates
  • Any rent or mesne profits which may have been lost because they are unable to re-let the property in its dilapidated condition
  • Consider any qualification through a schedule of condition where the tenant is not obliged to repair or redecorate the premises to a higher standard than when the lease commenced
  • The claim being made by the Landlord takes account of the diminution of value of the property in question (usually where the works in the schedule have not been completed)

 

Meeting these criteria ensures that a claim is less likely to be open to lengthy negotiations by the tenant and claims are more likely to be settled in a time and cost efficient manner, enabling the remediation and release of the property for re-let. For further advice on Landlord dilapidations matters, please contact Richard Estrop, London Office, richardestrop@paragonbc.co.uk

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