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Original poster

Dilapidations- advice on shop lease

26 replies

Orangeblossom7777 · 05/10/2020 20:39

Hi I am asking as we are trying to help deal with elderly relatives who are dealing with serious illness and coming to the end of a commercial lease. It seems they may have a bill for dilapidations on a very old building rented from the council, but at the same time are not in a position to have time to prepare things due to end of the lease coming up and family illness

What are their rights in terms of would the council claim this money back form them / could they claim against their home? Very difficult and sensitive situation. Thanks for any advice Flowers

OP posts:
DaphneduM · 05/10/2020 21:14

This happened to a relative - but the property was owned by a pension fund. They were hit with a huge bill for delapidations. They employed the services of an expert solicitor who managed to negotiate a really good reduction, so the amount became manageable.

As it's the council I would think they would take the circumstances into account and negotiate a fair solution. It sounds a very sad situation.

Africa2go · 05/10/2020 22:45

As above, they / you need to speak to a commercial property lawyer. If you can get hold of a copy of the lease, it will normally set out what their obligations are. Also try to find out what the Council will do with the building once the lease ends since that will affect what they have to do.

FAQs · 05/10/2020 22:59

You might not need a commercial property lawyer just yet.

Have they served a dilapidations survey?

Do they have a personal guarantee on the lease and is a deposit held?

There is a cap on claims, known as a Section 18.

A surveyor is actually more helpful than a commercial lawyer, they’ll read through the lease, the potential breaches and be able to cost the works and neg if required.

Under the terms of the lease the tenant is usually entitled to obtain their own advice inc a surveyor.

When they moved in did they have any type of condition report done, it’ll only be relevant depending on the wording of the lease, for example, to yield up, or return in a condition no worse.

Original poster
Orangeblossom7777 · 06/10/2020 07:48

As I understand it the council did some surveys in the past.

Of course this has all been compounded by lockdown as they had to close and he was told to shield, into the bargain, during this time the lease is expiring.

OP posts:
Original poster
Orangeblossom7777 · 06/10/2020 08:13

OK apparently the council did some surveys saying Over 100K in dilapidations (?) A 'nice man' at the council has recently helped them with the lockdown grant application which went to them to cover the rent. This has extended their lease by six months, to the end of the year.

However during this time health has worsened so they haven;t been able to tackle the problems and now time is running out Sad

We are heeling support with sorting health care at present which is the main priority / requirement and don't think they have funds to hire a lawyer, not at present anyway.

Our local MP has been helpful in the past with a different problem - wonder if they might be helpful for this perhaps..

In the meantime it would be wonderful if could reassure them the council won't come for their home which seems to be a concern.

OP posts:
FAQs · 06/10/2020 08:17

£100k! How big is the unit and what is it?

What do you mean by extended the lease, is it a protected tenancy and notice wasn’t served?

Otherwise a lease ends, the dilapidation are separate entity.

Original poster
Orangeblossom7777 · 06/10/2020 08:18

As it's the council I would think they would take the circumstances into account and negotiate a fair solution

I have read online, they sometimes take a lump sum to settle it..they have had local press recently over not reducing rents during lockdown I notice. Very high rent area. Lots of shops empty now, previously not at all

Under the terms of the lease the tenant is usually entitled to obtain their own advice inc a surveyor

Think surveys been done by the council only, not them.

When they moved in did they have any type of condition report done, it’ll only be relevant depending on the wording of the lease, for example, to yield up, or return in a condition no worse*

Again, done by council, think is to the same condition. But think there is something about fair wear and tear, and is a very old building. Listed.

OP posts:
Original poster
Orangeblossom7777 · 06/10/2020 08:20

£100k! How big is the unit and what is it?

It is retail, a whole Georgian building, one of those ones which is several floors, could be a flat in the top and shop below (not used as a flat though) so on several floors and a basement too....

OP posts:
FAQs · 06/10/2020 08:20

Ask a local RICS surveyor for a quote, they’ll give you initial thoughts for free and cost up likely costs. They’ll need a copy of the lease and the survey.

Don’t get a lawyer involved yet and the MP is unlikely to have experience but might be able to mediate possibly, but it’ll be limited.

Original poster
Orangeblossom7777 · 06/10/2020 08:22

What do you mean by extended the lease, is it a protected tenancy and notice wasn’t served?

Ok, so I think notice was six months notice at the start of this year, so until June / July but due to the lockdown this has been extended to the end of this year (December)

OP posts:
Original poster
Orangeblossom7777 · 06/10/2020 08:23

Thanks FAQs

OP posts:
FAQs · 06/10/2020 08:24

Is it listed? If it is that’ll help, under the code of leasing and dilaps limitations tenants are only required if possible to consider the most economic way for repairs before replacing.

Is the lease in a LTD company name? Does he have a personal guarantee.

Original poster
Orangeblossom7777 · 06/10/2020 08:25

Yes it will be listed.

No, don't think so (Ltd company) I'm unsure about a personal guarantee. What does that mean please? Unfortunately he is really quite poorly.

OP posts:
Original poster
Orangeblossom7777 · 06/10/2020 08:26

I mean it is a business and would be registered with Companies House..

OP posts:
Iamthewombat · 06/10/2020 08:26

It seems they may have a bill for dilapidations on a very old building rented from the council

Whilst other posters have given good advice, particularly re engaging a surveyor and the condition report, you seem to be surprised that your relatives ‘may have’ to pay dilapidations on the lease.

I’ve never seen a lease agreement that did not cover dilapidations. The older the building, the more likely it is that dilapidations will be costly. In my experience (accountant, with leasing one of my specialist areas), dilapidations are usually payable even where the lessees have given the place a coat of paint and taken down partition walls, signage, etc. I usually make a provision of at least one year’s rent for dilapidations, which was based on RICS (Royal Institute of Chartered Surveyors) guidance.

If you are expecting the council to waive the dilapidations you’ll be in for a shock. I’m sorry for your relatives’ troubles, but why should the council cover £100k of dilapidations for a private business?

Original poster
Orangeblossom7777 · 06/10/2020 08:29

I see, sorry...en.wikipedia.org/wiki/Personal_guarantee

OP posts:
Original poster
Orangeblossom7777 · 06/10/2020 08:30

It's totally new to me, just trying to help an elderly relative. Sorry if I'm not clued up enough but at the same time trying to help with end of life care...it is a stressful time.

OP posts:
Original poster
Orangeblossom7777 · 06/10/2020 08:31

Wombat I didn't find much helpful in your post, thank you anyway.

OP posts:
FAQs · 06/10/2020 08:33

I’ve got all the latest RICS info, not sure it’s available in the internet, I’ve got it via my latest CPD but happy to email it to you, dilaps bills always cover the worst case scenario and are negotiable, you have the option to complete the works or offer a financial settlement.

Unless an lawyer (or accountant) has building and surveyor experience they’ll be going on the wording on the lease and view it very black and white, a surveyor is worth it weight in costs to reduce the bill, after all the original survey was compiled by a surveyor.

Original poster
Orangeblossom7777 · 06/10/2020 08:38

The thing is as the lease is ending soon it might be tricky to get another survey done. I guess after the lease ends they won't be able to do that..

OP posts:
Original poster
Orangeblossom7777 · 06/10/2020 08:39

I'm a bit confused why would a new survey reach different conclusions to the surveys already done?

OP posts:
FAQs · 06/10/2020 08:43

I’ve messaged you.

mumwon · 06/10/2020 08:46

do they have any kind of insurance regarding the lease? Could it have legal insurance or advice on it?

Africa2go · 06/10/2020 09:09

OP hopefully you've had some good advice, but as far as the surveys as concerned, the Council will have a survey done and come up with a summary of what they says needs doing and estimating costs for those works.

Its the same as most things e.g. if you were getting work done on your house. Another surveyor might not agree that something needs repairing and / or that the estimate of costs is too high.

If the Council has done a Schedule of Dilapidations that says your relatives (the tenants) owe £100k in dilapidations, it might be that e.g. another surveyor says the dilapidations are in reality only £50k. What happens then is that the parties try to negotiate somewhere in the middle.

The point about a PG is relevant and important. Unfortunately, I really think you're going to need a solicitor.

FAQs · 06/10/2020 11:13

@Africa2go is spot on.