Dilapidations Week: Coordinating dilapidations with refurbishment works

Frequently landlords will have to refurbish in order to re-let their property. Tenants are also increasingly refusing to settle dilapidations claims unless, and until, their landlord can prove losses - and has therefore done the repair works.

So, more than ever, landlords’ refurbishment programmes will need to be carefully planned, structured and implemented in order to maximise financial recovery in relation to a former tenant’s dilapidations liability.

Properly advised and savvy tenants will be aware of the Section 18(1) Landlord & Tenant Act 1927 argument that a tenant may not be liable for repairs on account of their former landlord’s demolition works and/or structural alterations.

‘Betterment’, in other words carrying out repair works which put the building into better repair than when the lease was granted, can also lead to disputes. As can arguments by tenants that improvements would ‘supersede’ the work that should have been carried out.

Landlords’ claims for refurbishment works resulting from a tenant’s breach of covenants do not prevent the landlord from recovering the costs of such core / necessary works, even where more extensive works (the supersession) have been undertaken.

What should landlords do?

In practical terms, when lining up a refurbishment, landlords should ensure firstly that they can justify any “betterment” on the basis that it is a reasonable manner in which to perform the repairing obligation.

Secondly, landlords need to show they understand which refurbishment works can realistically be claimed as dilapidations and which cannot. Having distinguished between the two, they should collate detailed supporting evidence of the differentiated costs. Preliminaries, tenders, specifications, quotes etc. can all be prepared and separated out with this in mind.

To discuss your dilapidations query with an expert, please get in touch with a member of Thrings’ Dilapidations team. Our wider Property Litigation team is on hand to help with other property related disputes.

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