Drake Howard Property has the expertise and trade contacts to discharge end of lease disrepair claims on behalf of tenants. This expertise has recently been demonstrated at a workshop and office unit at Binley Industrial Estate, occupied on a short-term lease by a major automotive engineering services company client.
The tenant had signed a lease for a term of 6 years from June 2014 which included a liability to ‘keep the whole of the Premises clean and in good and substantial repair’ and to ‘yield up the Premises to the Landlord with vacant possession’ in such state of repair.
“The client came to us in early May as they had served notice to exercise a break clause in the Lease on 23 June 2017. It goes without saying this left us a very tight time-scale to deal with the Landlord’s dilapidation claim, one way or another and, ensure hand back of the Premises with ‘full vacant possession’ to avoid invalidating the break,” said Martyn Howard.
In brief, the disrepair extended to a long list of minor defects, redecoration and major works to adaption of electric circuits and cut-edge peel to most roof cladding sheets. The value of the claim in the Landlord’s Surveyors Schedule of Dilapidations amounted to £38,500, inclusive of fees.
Inspection of the Premises was needed as a matter of urgency, to establish if any of the works, or scope of remedial work in the schedule, was unreasonable in the context of repair clauses in the Lease. Thereafter, to estimate the cost of essential repair and decoration work to determine if there was room for negotiating payment to the Landlord to settle the claim.
“Negotiated settlement of dilapidation claims normally take time, unless the tenant is prepared to ‘roll-over’ to extricate themselves from the lease,” Martyn added. “In this case there was no time for extended negotiation and it soon became clear, the Landlord’s Surveyor was unlikely to move significantly from the headline claim, in the circumstances and time-frame of exercise of the break.”
Our preferred building and electric contractors were therefore, brought in and given schedules of work to price, simultaneous to discussion with the Surveyor. As soon as we had established costs from the contractors, acceptable to the client, we set to managing the remedial work.
Roof sheet peel and gutter clearance and seal had to be the first job attacked, while the notorious UK summer weather held. Industry recommended treatment was applied to sheet edges in 3 coats and the tenant cleared all remaining possessions and equipment from the Premises. Contractors stripped out compressed air pipes, electric points and cables, connections and fixtures in the workshop and worn carpets to offices, entrance and stairs.
Making good all minor repairs was followed by decorators moving in and the electrical contractor replacing distribution boards, defective fixtures and testing to safety standards for certification. Air conditioning engineers costed the replacement of a defective condenser and it was agreed to pay this sum over to the Landlord, together with agreed Surveyor fees.
Four weeks later, keys were handed over to the Landlord, 3 days within target and the overall saving to the Tenant was in excess of £15,000. Nearly 40%!
The cost of putting the Premises back into good repair remained, an expensive one. Particularly, for the size of the workshop and office building. It stands as a cautionary tale to prospective occupiers of business premises taking on full repair covenants in a lease. The words ‘keep in repair’ in this lease, were in effect as good as meaning the tenant had to return the Premises to the Landlord in ‘good repair’ irrespective of the condition of the property when this short lease was signed. “We come across the circumstances all too often” exclaimed Martyn. “The conception is the property should be left as found and tenants will often be able to produce photographs as evidence. It matters not, unless the condition is agreed with the Landlord and formalised. A new tenant should always seek the advice of a qualified surveyor with experience of lease covenants and remedies, to work with the solicitor, who is unlikely to visit the property.
In this case study, the cost to the tenant could have been much more had it not been for our understanding of property law and our trade contacts made as commercial property managers. Defects which went beyond the repair liability were rejected and we engaged contractors at negotiated prices to complete work in time, to avoid invalidating the lease break clause where rent and business rates liabilities would have continued.”
23 FEBRUARY 2018