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The South West Specialists

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Maintaining good tenant relations through proactive repair

It is common to find that most leases require a tenant to keep their demise in a good state of repair. In this case at the end of their lease the tenant will be responsible for ensuring the property is returned to the landlord in the condition which would result from the tenant complying with its obligations. This will include gas, electrical and other services along with compliance with statute/fire regulations, which ensure that fire alarms are serviceable when tested.

Tenants often spend considerable sums of money at the end of their lease putting the building into repair, which in essence is for the benefit of the landlord and incoming tenant. A more pro-active approach to the repair of the property, especially on some longer leases of ten years plus, could mean that undertaking work at, or close to the end of a lease by the outgoing tenant will mean that a new incoming tenant benefits from money expended. This is particularly the case where elements, whilst in repair now, may require renewal or significant expenditure at the end of the lease. A typical example of this being light fittings or boiler installations. To renew these at the commencement of a lease and maintain them in repair means that the ingoing tenant benefits from cost savings in running costs of a modern installation compared to one that is outdated and inefficient. If these modernisations are maintained in repair, there should be minimal costs at the end of the lease for the tenant to hand back a compliant system and building in a good state of repair.

When approaching the end of the lease, both landlords and tenants should be mindful of the time and cost required to put the property into repair. It is not uncommon that tenants will run out of time when instigating repairs and either rush the work, resulting in items being missed, unfinished and/or poor quality work being undertaken, which is then justifiably undertaken again by the landlord. Prudent landlords will involve surveyors during this dilapidation phase in order to manage works which are agreeable to both parties and associated costs agreed upon in advance of any works undertaken.

If the matter is being dealt with after the tenant vacates the landlord does however have the ability, if specified within the lease, to recover costs and losses. Therefore if the building is not in repair at the cessation of the lease, the time taken to specify remedial work and repairs, obtain tenders and instigate the work are a cost that can be recovered from the tenant. This includes consultant’s fees, the cost of the works and the loss of rent, rates and service charge for the period that this process takes. This however can be a lengthy process, sometimes ending with a legal fees if the tenant does not agree with the landlord’s perception on the above matters.

As leases are coming to an end the landlord should review the terms of the lease and any licences carefully to ascertain whether they have any obligations to notify the tenant of the landlord’s requirements for reinstatement of tenants’ works. Where possible preparing a pro-active strategy for the building and give consideration to the marketing of the soon to be vacant space. If a landlord fails to comply with the requirements of the lease, this can leave them with tenant alterations to undertake which become their own obligation.

A proactive landlord should:-
• Undertake a schedule of dilapidations prior to the end of the lease.
• Consider cash flow and investment into to property that they are prepared to make with a mind to an incoming tenant and also recent EPC legislation updates (being that all properties should be rated D or above from 2016).
• Employ the Dilapidations protocol issuing a schedule within 56 days of the end of the lease.

Vickery Holman has one of the largest building surveying teams based in the south west with surveyors within each of its offices equipped to advise on these matters. If your lease is coming to an end and you think that these issues affect you, please contact your local Building surveying team to discuss this with one of our Experts.