Dilapidations in Kent Commercial Premises
Dilapidations in Kent Commercial Premises, some thoughts if you are a commercial landlord or tenant.
Dilapidations in Kent Commercial premises are the subject of much debate however if you are a landlord of Kent commercial premises or a tenant occupying Kent commercial premises then it is imperative that you have an understanding of dilapidations and how they can affect you.
Dilapidations claims are an unavoidable issue for owners and occupiers of commercial property and the incidence of these is becoming ever more common given the shortening of lease lengths and the increase in the inclusion of break clauses.
Graham Kinnear of Graham Kinnear Property Consultant, a building surveying firm headquartered in Kent but with offices nationwide comments “The principal thing for owners and occupiers to remember is that in most jurisdictions, damages in dilapidations is generally the lower of the cost of remedial works or the cost of the impact of those works. It is therefore clear to see that the costs can be considerable”
Kinnear continues “Generally speaking a dilapidations claim generally starts with one party engaging the services of a Building Surveyor to thoroughly inspect the premises and identify any breaches of the lease covenants regarding repair, decoration and the reinstatement of alterations. The surveyors report will generally include costings of these works. The total of these works plus fees and in some cases consequential losses will form the basis of the amount of damages which shall be claimed”
The claim itself is typically served by a solicitor acting on behalf of either the landlord or tenant. Typically upon receipt of the claim the opposing party will appoint their own Building Surveyor with a view to negotiating the claim.
The team at Graham Kinnear Property Consultant deal with a variety of dilapidation claims and to date have not had a case go to litigation. Indeed it is understood that nationally, only around 1% of dilapidation claims make it to Court with the vast majority instead resolved by negotiation or via Alternative Dispute Resolution.
One issue that dilapidation surveyors often face is that of engaging the correct skillset when dealing with a Dilapidations Claim. For example, it is doubtless the Building Surveyor who can assess the required remedies to the premises in line with the conditions of the lease but it is arguably the Valuation Surveyor who is best qualified to assess to what extent the breaches of covenant have had or continue to have on the current value of the premises.
The value of the premises in the condition required by the lease should be relatively straightforward to calculate. There will be local comparative data of similar units being let and the application of an appropriate Zone rent value should be possible. Furthermore, the calculation of the costs of the repair should also be reasonably straightforward. The challenging issue is doubtless when trying to calculate the reduction to value based on the repairs required without simply using the cost of the repair and any consequential loss.
Accordingly it is this area of the calculations which is most commonly challenged. Surveyors may also challenge a claim for loss of rent for premises where it is considered unlikely that the landlord could have secured a new letting earlier than the period required to undertake remedial works.
In summation therefore a dilapidations claim can vary considerably beyond the issues identified on the premises. Valuation anomalies and interpretations, local comparative prices achieved and general market sentiment can all play a part.
Accordingly both parties should be represented by a surveyor to ensure that cases are fairly settled.
For these reasons we believe that negotiation and the use of Alternative Dispute Resolution (ADR) are, on balance, the most productive way to deal with a dilapidations claims.
If you have any questions or queries relating to dilapidations in Kent commercial premises or would like one of our surveyors to undertake a dilapidations survey for you, then please contact us at [email protected] or 01843 583000.
If you would like to read more on dilapidations then why not read our guide to Dilapidation SurveyorsBack