A Schedule of Dilapidations is a detailed schedule of works identified which the landlord requires the tenant to undertake (interim) before the end of lease or that should have been undertaken and haven't at the end of a lease.
A schedule of dilapidations is carried out by a Chartered Surveyor, such as our team here at Risk Averse Surveyors Ltd.
At the end of the Lease the Schedule is known as a Terminal Schedule of Dilapidations or Final Schedule of Dilapidations and this identifies the works which the Landlord requires at the end of the term or if a Lease has ended it identifies the works which the Tenant should have undertaken.
Essentially acting as a guide to dilapidations for the tenant, this document outlines what repairs must be scheduled to reinstate a property to its original condition as stated in the lease agreement.
This document contains details of all the items in a commercial rental property, from major structural damage, to wear and tear that is liable for repair by a tenant under the terms of the lease.
A schedule of dilapidation's primary purpose is to protect the value of a property by ensuring its condition remains intact.
Schedules of dilapidations may also contain:
- The sections of the lease agreement that have been breached.
- This document contains details of all the items in a commercial rental property that are liable for repair by a tenant under the terms of the lease.
The document, usually an Excel spreadsheet, will propose remedies along with costings for the remedial works (along with any claims for loss of rent, interest etc.). This is usually ‘served’ on the outgoing tenant by the landlord’s solicitor.
What are the different types of Schedule of Dilapidations?
There are three different Schedules of Dilapidations: Interim Schedule of Dilapidations, Terminal Schedule of Dilapidations and Final Schedule of Dilapidations. Broadly speaking, they all set out the tenant’s obligations to bring the property back up to the condition it was let out in. The difference is they’re used at different points in the lease period.
Interim Schedule of Dilapidations (often referred to as interim dilapidations)
This is issued during the course of the lease, for example, if a landlord is concerned that proper maintenance isn’t being carried out. The aim of the Interim Schedule is to remind the tenant of their obligations and clarify what’s expected – thereby helping to nip any neglect in the bud and protect the value of the property, while also protecting the tenant from higher repair costs further down the line.
Terminal Schedule of Dilapidations
The somewhat more ominous-sounding Terminal Schedule is used towards the end of the lease, usually within the last 18 months to three years of the lease. This schedule of condition is often more detailed than the Interim Schedule, listing items of disrepair that need to be fixed before the end of the tenancy.
Final Schedule of Dilapidations
The Final Schedule is issued after the lease has expired, in the event that required repairs haven’t been carried out. Similar to the Terminal Schedule, this one will generally set out in detail what works are needed, but, as the lease has already expired by this point, the Final Schedule may also include the cost of lost rent while the repairs are being carried out.
Responding to a served schedule
The tenant should engage their own chartered building surveyor to carry out their own survey of the property and prepare a robust ‘Response’ to dilapidations claims.
Typically, this is the addition of their own columns and rebuttals of certain alleged breaches to the Excel document, along with alternative suggested remedies and lower costings.
At the same time, to maximise strength in the dilapidations negotiations, the tenant may include the defence of the ‘statutory cap’. This is an argument that damages suffered due to the impact of the breaches on the freehold value of the property will be lower than the cost of the remedial works.
This is called a ‘Diminution Valuation’. A Diminution Valuation is prepared by a chartered valuation surveyor. Unfortunately we do not have valuation surveyors in house to do this part but we do work closely with others to be able to recommend you to qualified parties.
More often than not, the ‘statutory cap’ does serve to reduce the settlement figure to less than the lowest assessment of Cost of Works.
Note that in any event, if a landlord has not done, or does not intend to do any or all of the remedial works, paragraph 9.4 of the Dilapidations Protocol requires that the landlord should be providing its own Diminution Valuation in support of its claimed loss.
If you have any queries or questions about the above information. Have had a schedule served upon you as a tenant or alternatively wish to serve a schedule as a landlord. Talk to one of our friendly, approachable and knowledgeable team today at Risk Averse Surveyors Ltd to see how we can help.
Our number is 01706 614766 or alternatively you can contact us by email on [email protected].
We cover the entire of the United Kingdom although we are based in Rochdale, Manchester.