Written by: Ian Harrington on Wednesday 04/11/2015
When it comes to retail properties, the leasing standards have changed somewhat given the evolution of the economic climate in the wake of the financial crash in 2007.
For example, leases tend to be shorter than they once were, and break clauses are often included as standard so that retailers can examine their options regarding scaling down, upsizing, or relocation. Also common in leases now is the terms and conditions upon exit. Dilapidation refers to the condition of the property, and whether there are any repairs or redecoration required at the end of the lease. Almost every landlord will write into a lease that a tenant will be responsible for dilapidations upon departure, and depending on how much work needs to be done, there is the potential for a landlord’s claim to amount to thousands of pounds of work.
For occupiers of retail spaces then, understanding their obligations and forward planning can help them maximise savings on this necessary work. There are a few tips that can help in this regard:
Ideally, you should have more than one exit strategy in place, and all of those should account for your liability to repair and redecorate the property as you leave. You should start planning your departure at least 6-12 months in advance of your lease ending.
A landlord is legally able to serve what is termed a Jervis v Harris notice. This means they can send their tenant a list of items found to be in disrepair under the proviso that they are repaired within a certain timeframe. Should the tenant fail to carry out said repairs in the defined period, the landlord can then enter the premises themselves, carry out the work, and send the bill to the tenant as a debt. This can of course be incredibly costly, and so tenants should be aware of this legal obligation and have contingency funds in place should any repairs be required.
The Dilapidations Protocol permits the court to levy sanctions against defaulting parties if they fail to follow the terms of the dilapidations protocol, and this can be done prior to the start of a claim for damages associated with breach of covenant. Working with a Chartered Surveyor will enable you to better understand your obligations as tenant, your landlord’s legal rights, issues of compliance and more.
If you are dealing with dilapidations, having a chartered surveyor on your side that can help negotiate terms, steer claims away from court and act within the perimeters of the law with your best interests at heart can be absolutely vital. This expert will also be able to give you further advice regarding how to maximise savings on dilapidations.