How to Resolve Dilapidations Disputes in London

The Dilapidations Protocol

Firstly, there’s one thing we need to make clear. There are two key pieces of guidance when it comes to dilapidations that must be followed. Because this is such a common type of disagreement, the courts have actually produced a structure for settling dilapidations disputes. It’s formally known as the Pre-Action Protocol for Claims for Damages in Relation to the Physical State of Commercial Property at Termination of a Tenancy. What a mouthful! To make it a bit easier, we all call it the Dilapidations Protocol.

This protocol sets out a series of steps that should be taken by each party, along with some suggested timescales they should be done in. The whole purpose of the Dilapidations Protocol is to encourage early agreement on as many items as possible, so that if, in the unlikely event a dilapidations dispute proceeds to trial, the court need to decide as little as possible. This frees up court time, which is better for everyone. If, at the trial stage, it’s found that a party failed to adhere to the protocol’s requirements, then this will be considered at the costs stage.

While it is very important to pay attention to the protocol’s requirements, there is little to no prospect of many claims getting to the trial phase. So while I would never say that the protocol should be ignored, there’s not a lot of benefit in getting too excited about things like 56 and 28 day deadlines. In reality, these deadlines are often missed for a number of reasons.

RICS Guidance

The other core piece of guidance comes from a document called ‘Dilapidations in England and Wales’. It’s released by the RICS, and is currently on the 7th edition at time of writing. This is a slightly more nuts-and-bolts style, and set out best practice formats for presenting dilapidations claims and responses. It also clarifies that “both the courts and the RICS encourage dialogue between parties to a dispute”.

With both of these guides, the best way to find a resolution to a dilapidations dispute (or any dispute really) is to talk to each other.

The Importance Of Dialogue

Of course, it’s possible that the landlord will be able to speak to the tenant directly and reach a compromise that both sides are happy with. It can happen. However, what we see most of the time is that an inequitable settlement is reached, with one party (usually the tenant) ending up with a loss greater than they should. In London, dilapidations claims can involve large numbers, so even a skew of a few percent could mean a loss of thousands of pounds.

That’s one of the reasons I would always recommend that each party appoint their own dilapidations surveyor to act as their advocate and discuss matters between themselves. This will improve the parity of information on both sides, since each surveyor will (in theory) have a detailed understanding of the dilapidations process. The two experienced surveyors entering into the dialogue should then end up with a settlement that a court could endorse, without the higher costs that a court decided dispute would bring.

As a side note, you do need to do your homework here and make sure you’re appointing a true dilapidations specialist. You don’t want a surveyor who just dusts off the dilapidations service line every now and then.

What Does That Discussion Look Like?

Initially the surveyors will consider each item in the schedule of dilapidations individually, assessing whether each item has caused the landlord to suffer a loss. They will document their thoughts in something called a Scott Schedule, which is essentially a spreadsheet that grows each time a party adds their notes to it. It’s a great way to find a common ground, and it’s easy to see from a Scott Schedule where there are still areas of contention.

If the surveyors feel like they’re reaching a deadlock, then they will meet in person, ideally on-site. This type of meeting is always on a ‘without prejudice’ basis, as it’s important for surveyors to be able to speak freely so that common ground can be found. Even then, there might be a couple of areas that the surveyors simply can’t agree on. If this happens, we would always discuss this with the client, explain their current position and help them to understand the risks of failing to compromise.

A lot of clients simply want the dispute to be over and done with, so we will then prepare a proposal that we think will be palatable to the other side. In some cases, it might be clear that one party has the upper hand. Depending on whether that’s our client or not, we would recommend an appropriate course of action. This could be to dig in your heels and put the ball in their court, dust off the chequebook to bring things to a conclusion, or a position in between.

There really is no one size fits all solution for dilapidations, so surveyors need to be able to fit in with their client’s appetite for risk, as well as explaining to them what the risks of various negotiation strategies might be. Basically, it’s the same as any dispute – open dialogue and communication is important. But it’s also useful to recognise that when surveyors discuss dilapidations disputes, their conversations are highly process driven with an approach that aims for equitable settlements. This means that the parties to a dilapidations dispute in London can be confident that their interests are being well represented, and that an equitable settlement has been reached.

Of course, some settlements can be more equitable than others, if you have the right surveyor on your side. If you need help negotiating a dilapidations settlement, then our team of specialist dilapidations surveyors are happy to help. Just give us a call on 020 8153 1233 to find out more.

For more expert advice on surveying and property matters, check out our range of informative videos on our website or YouTube channel. Harrison Clarke Chartered Surveyors is here to guide you every step of the way!

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