Many licensees enter into lease agreements without fully understanding the extent of their repairing obligations. When they come to assign or terminate their lease, they can be caught out by landlords issuing a schedule of dilapidations for outstanding repairs.
A large number of leases are on the basis of “to put and keep in repair” — meaning that, regardless of the property’s condition at the start of the agreement, it is the lessee’s responsibility to yield it up in “good and substantial” repair.
The best way to avoid this is to negotiate for a schedule of condition to be drawn up prior to entering into the lease, which will form the basis of repair on a “no better state than as shown in the schedule of condition” when yielding up.
Decorations are usually required to be carried out at specific times during the lease term. While a lessee may obtain some protection under the Leasehold Property (Repairs) Act 1938 — that they are not affecting the landlord’s reversionary interest — this requirement is enforceable at the end of the term. Lessees should plan and carry out the decorations during the final period of the lease to avoid being hit with a claim.
Complying with statutory requirements is another potential for claim. Lessees need to be careful landlords do not try to include improvements. For example, the electrical installation could be safe and compliant as when first installed, so any requirement to upgrade to the latest edition of IEE regulations should be challenged.
Alterations should be subject to the landlord’s app-roval. If not, the cost of reinstatement could form part of a dilapidations claim. Lessees are usually unable to obtain compensation for alterations that improve the property, but approval could avoid any further costs.
The best way to limit exposure to landlord’s dilapidations is to take professional advice prior to commitment. Restricting obligations at the start and understanding what can and cannot be done could help reduce later dilapidations claims.
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