NG Warns Property Managers and Tenants About the Woes of Dilapidations
17th June 2013
A Nottingham chartered surveyors is warning commercial property managers and tenants to ignore the problem of dilapidations at their peril.
Richard Brown, managing director at NG, has seen at first-hand how the issue of property dilapidations has caused long and costly disputes between property owners and tenants – and says that he has seen more than ever this year.
Richard said: “This year I’m seeing more and more problems arise because landlords have not been clear with tenants about how the nature of dilapidations is addressed; equally, tenants go full ahead to get into a property without being advised of or appreciating the full liability that they are signing up to under a lease. Time passes and leases end, and both parties are then in a face off over repairs.”
“The condition of a property invariably leads to disputes that can turn ugly and in the worst case scenario, legal action and Court. This is an extremely expensive way of settling the problem and in my opinion it’s an expense that could easily be avoided.”
To avoid costly disputes, Richard says that both property owners and tenants need to make sure that it is clear in the lease agreement about where the responsibilities of both parties lie; this is particularly pertinent for a tenant, who is often the least well informed of the two parties as to their liabilities.
Richard said: “The main components of a dilapidations claim are repairs, decorations and alterations, and any statutory requirements. A tenant is likely to have a liability to reinstate any alterations that they have made, albeit these are not always detrimental to a property’s future use and occupation leaving scope for discussion.”
The parties are strongly advised to appoint a surveyor to act on their behalf. Surveyors are now required to follow the guidance of the RICS Guidance Note which endorses the Dilapidations Protocol. This was initially introduced by the Property Litigation Association (PLA), but which became mandatory for surveyors in 2013.
Richard said: “The protocol sets out a framework to which surveyors should adhere in terms of how dilapidations are approached. The aim of the Protocol is to avoid formal litigation by ensuring that disputes are resolved prior to the commencement of proceedings; this has now been integrated as a formal part of the Court Procedure Rules (CPR). Failure by either party to the dispute to comply with the Protocol could increase the likelihood that it will face the burden of both parties’ legal and surveyors’ costs.
Richard Sutton, director at NG Chartered Surveyors, is a commercial mediator. He said: “It’s important for both landlords and tenants to follow the protocol. The last thing anyone wants is for a claim to go to court. But if there are any disagreements, I’d recommend property managers bring in a third party, the most pragmatic and cost effective option being a mediator.”