What Should a Tenant Do After Receiving a Schedule of Dilapidations?
Firstly, you need to understand that although there is a claim formally set out in a schedule of dilapidations, it’s very rare that dilapidations claims are settled at the original claim amount. Instead, you should consider this as your landlord’s line in the sand, giving you a detailed assessment of technical breaches of the lease. For now, ignore all monetary figures in your schedule, especially the total claim value. This is purely because the figures can be far more emotive than the claim items, so it helps to put you in a better mindset to take an objective, rather than an emotional view of the claim. Dilapidations negotiations aren’t won with emotions.
Even once the numbers have been removed from your schedule, there are some traps it’s easy to fall into if you’re not careful. For example, you could say fair enough – I didn’t replace those damaged lights or repair that hole in the door and stop there. But it’s important you look further than this. Dilapidations loss isn’t just about how a lease has been breached. The landlord must also have suffered some loss as the result of that breach. This could either be through bearing the cost of completing remedial works, or that their property is worth less as a result of the damage. So even if you didn’t replace the lights, consider whether the landlord will replace them at all. If they do, will they replace them because they were damaged, or because they were the older style fluorescent lights and the market now demands LED style? Out of those 2 scenarios, only one of those mean the landlord would have suffered a loss as a result of this particular lease breach, and that you would then be liable for the dilapidations.
It’s a similar thing for the hole in the door. Is the hole actually bad enough that the landlord will repair it? Could it be filled and painted at minimal cost? Will the landlord replace the doors anyway to modernise the property? Or will the landlord be taking out the wall the door sits in for redevelopment, so it doesn’t matter anyway? Again, out of 4 scenarios the landlord has only suffered a loss in 1.
How Can a Tenant Challenge a Dilapidations Claim?
You might have noticed that we’re using a lot of ‘what ifs’ so far. That’s because these things might not necessarily get you any closer to a settlement, but that doesn’t matter. As the claimant, the burden of evidence falls to the landlord, not you. Although your dilapidations claim isn’t likely to end in court, the same principles that a court would apply should befollowed in negotiations. So, if you aren’t satisfied that the landlord has provided sufficient information or documentation to back up a claim item, you can continue to question it until you are truly satisfied with the response. For example, have you seen legitimate invoices relating to work they claim to have done? And make sure they really are invoices! Often when we work on dilapidations claims we’re sent quotations for work with no evidence that the work has been done. And of course, the attachment’s file name will be ‘invoice’ and not ‘quotation’ to try and sell the lie.
But remember, as much as you have rights to see evidence of the landlord’s loss, you do have some obligations too. When facing a claim, you should submit a response in a reasonable timeframe, which is set out in the Dilapidations Protocol. These timescales are designed so that dilapidations disputes proceed in a timely manner, since this is often where they can be most cost effective, especially when it comes to fees for professionals. Often, you’ll be lacking the evidence to back up the landlord’s claim, and you’ll have a lot of questions that need answering before you pay the landlord a penny, so it isn’t unusual for the proposed settlement value in a tenant’s initial response to be a very small number – sometimes single figure percentages of the original claim value.
Can a Landlord Pressure You to Settle a Dilapidations Claim?
If the landlord (or their surveyor) tries to put you under pressure to settle the claim and cites the timescale on the dilapidations protocol, it’s a good sign that they have their own reasons for pushing for the settlement. This could be something like making a re-letting, which will allow part of all of the claim to fall away. It’s incredibly rare to face consequences through non-compliance with the dilapidations protocol, especially if you’re actively engaging in the process. It also helps that very few dilapidations claims are actually heard in court. That being said, if you do plan to ignore the protocol, you should discuss your proposal to do so with a dilapidations professional so that you can balance the risk of doing so with potential benefits.
Only once you’ve considered which dilapidations items have genuinely caused (or are likely to cause) the landlord loss, should you then look at the figured cited in the schedule. By now you should have built up an objective picture of where the loss lies, and what the real costs are. So you’re in a good position to assess the reasonableness of the claim items, and if the landlord hasn’t fully evidenced their claim, you should think about whether you agree with the proposed costs of the work. In our experience, landlords often build some fat into their figures or overclaim for some items. At this stage, you should contend any figures that seem excessive. The key issues to be considered when you’re responding to a schedule of dilapidations as a tenant are that the schedule of dilapidations is often a statement of lease breaches, without full consideration of the landlord’s losses. You should assess each item individually as an uncosted work item, and only then interrogate the costs. You shouldn’t be pressured to make an early settlement if you don’t have the information to do it, and the actual costs will often only be looked at once you’ve decided if the loss has arisen.
How Should a Tenant Respond to a Schedule of Dilapidations?
As a tenant potentially facing their first dilapidations claim, it’s often difficult to understand which items of work the landlord is actually likely to do, and which they’re not. So it’s important to speak to a dilapidations surveyor, since we’re well versed in what types of work different types of landlords are likely to do, and we can help you to take a risk-based approach to responding to your schedule.
Preparing the schedule of dilapidations is only the beginning of a process. Negotiations often run on for months and, in some instances, even years. So there’s absolutely no reason why you need to settle your dilapidations case within the next few weeks or even months if you’re not happy with the outcome, or if you don’t agree with the process that’s being followed.
It’s critical, when you’re facing a dilapidations claim, that you seek advice from a specialist dilapidations surveyor. Especially if you feel that there’s disproportionate unfairness. A specialist will have seen this kind of situation many times before, and be best placed to provide advice on how to mitigate your claim. Whether that’s completing works yourself, or taking a more nuanced view on the potential losses a landlord is facing. Using their experience and knowledge can save you tens, and even hundreds of thousands of pounds, so its well worth doing! We’ll also be able to help you understand how the law would be applied to your claim, so that you can have a complete and balanced view of how to move forward.
What Can a Tenant Do to Reduce a Dilapidations Claim?
Of course, there are some things you can do as a tenant to help narrow the claim. Things like providing a full suite of documents including asbestos surveys, air conditioning servicing documents and electrical test certification, all of which demonstrate that you’ve kept the premises in good repair. These simple things can help remove large figures from the claim, as this reduces uncertainty for the landlord. Assuming the test certifications are available, we recommend that you provide these to your dilapidations surveyor at the earliest opportunity, since they can advise you when it would be useful to pass this on to the landlord. Believe it or not, this isn’t always beneficial to do right away!
Once you’ve appointed a dilapidations surveyor, we also recommend you ask them to handle all the communication moving forward. This is because if you communicate directly with the landlord, it’s possible that you might inadvertently prejudice your situation, which will then limit how effective your dilapidations surveyor can be.
All of that might sound a bit scary, but it doesn’t need to be! All you need to do is take a considered approach to reaching settlement, and take professional advice before you do anything. If you’re in this situation at the moment, or it’s coming up and you want to understand how a dilapidations surveyor can add value by reducing the claim, our expert team are happy to help. Just get in touch with the team today to book your free, no-obligation consultation.
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