What are dilapidations and when do they arise?

Bear in mind it is not the landlord’s responsibility to inform the tenant of the scope of works and when they need to be undertaken, it has already been agreed when you completed the lease that, on the anniversary date you would prepare the property for handover as detailed in the lease. If you don’t hand the space back in a condition that is acceptable to the landlord, you may also be liable for loss of rent. That was a rent agreed in a rising market and not necessarily in the current market.

There are some landlords that are happy to take the money and there are some that will only want the space stripped back to how it was at the start of the lease. It is important to find out what your landlord’s preference is.

You will need to be prepared before you talk to the landlord and negotiate either of these outcomes. So, are you able to prove the condition of the space as you took it on? Did you complete a photographic schedule of the space before you completed the lease? Did you get a Licence to Alter for any of the works you undertook, attached to the lease from the outset? Both of which will allow you to have a fair discussion with your landlord.

The dilapidations sum is arrived at through a schedule of works that the landlord itemises outlining their expectations to allow a figure to be identified for the works. It may be that you disagree with these figures and a Licence to Alter and photographic schedule will allow you to have that conversation with the landlord from a position of some stability.

Additionally, it may be that as businesses have those conversations with the landlord, about cutting short the lease or reducing the size of the office space the landlord is not incentivised to be helpful.

But just walking away is never a solution and bad financial histories will certainly not help future expansion and investment into your business.

1. It is better to get on the front foot.
2. Do you know what your liabilities and responsibilities are?
3. Do you know what space you need?
4. Have you spoken to your staff?
5. Can the space you currently occupy be remodelled to suit your new needs?
6. Are you able to sub-let some or all, of the space?
7. Will the landlord allow you to be flexible in terms of rent, size of space, sub-letting?
8. Has the landlord given you a schedule of works that you disagree with?
9. How to move forward!