Why is Statutory Testing Needed?
As a general rule, periodic statutory testing is required by law for all mechanical and electrical installations in a lease setting. That includes things like air conditioning, heating, fire detection, lifting equipment and so on. Some surveyors will take this a step further and ask for asbestos management plans and fire risk assessments. So there really is no question that it’s best practice to have the relevant documentation up to date and on hand at the end of the lease. But when we’re dealing with a dilapidations disputes, it’s all about the requirements that are written into the lease agreement, not the ‘nice to have’ options.
When you’re considering whether you need to hand statutory documentation to the landlord at the end of the lease, it’s important to think about a few key issues. Mainly that within the lease there are normally separate provisions around disrepair, statutory compliance, and how to hand the premises back at the end of the lease (also known as the ’yield up’ clause).
A functional installation would be considered to be ‘in repair’ if it’s fulfilling its function as designed. Not providing valid test certificates wouldn’t normally render an item in disrepair, especially not under standard lease drafting. But there might be exceptions to this, so the exact lease wording needs to be scrutinised.
Understanding the Breaches
While statutory compliance is important to make sure a property is safe, there are a few different ways to figure out whether the statutory compliance requirement has actually been breached. To do that, you really need to understand the breach. Let’s look at an example.
The LOLER regulations (which relate to the inspection of lifting equipment) were enacted under the Health and Safety at Work Act 1974, which is the primary legislation. It places the responsibilities on employers who are in control of lifting equipment. At the end of the lease, a building being handed back to the landlord will be vacant and no longer a workplace, which means there won’t be an employer with control over the relevant equipment at lease end, when dilapidations loss is considered to accrue. So while at first glance it seems sensible that a passenger lift should be handed back certified in compliance with LOLER regulations, if you follow the legal thread back to the real reason the legislation is needed, it doesn’t match up as a lease requirement.
However, it’s not always so simple. In some instances, a tenant will be required by the lease to hand the property back with test certification. Sometimes this requirement will appear in the yield up clause, but it could also turn up in the statutory compliance or repairing clauses. It’s rare, but I’ve even seen larger landlords use their own standard lease wording for this – which is a sensible way to addressing this issue to avoid it becoming a bone of contention at the end of the lease.
Of course, there will still be situations where a landlord can rely on the repair clause to recover the cost of statutory testing. For example, if an electrical fault is found only as a result of testing, then the testing or fault finding could be considered as part of the repair. In this case, both the cost of the testing and the repair works become the tenant’s liability. On the flip side, if the electrics are tested and no faults are found, then the landlord bears the cost.
Asbestos Testing
Claims requiring asbestos testing are also fairly common. In this case, the duty holder does have an obligation to maintain an asbestos register, and to share information with interested parties under the Control of Asbestos Regulations 2012. So if a register isn’t available at the end of the lease, the landlord could claim the cost of arranging for an asbestos survey to be prepared. However, in most circumstances this doesn’t happen, so if the landlord hasn’t had to spend money, then they’ve suffered no loss.
It’s very common for claims for a refurbishment and demolition survey to be accepted as a head claim where there’s remedial work needed. But only if the nature of the works for the disrepair needs such a survey, since this is much more likely to be commissioned. If the landlord is planning other upgrade works alongside the dilapidations that would also need a refurbishment and demolition survey, then it might be appropriate to share the costs. However, the tenant could also resist paying the landlord on these grounds, since the cost of the survey would be the same, and that the landlord would have incurred this cost as part of their improvement works anyway. And, as with anything dilapidations, these costs will need to be assessed against the facts.
Fire Risk Assessment
Some landlords will ask for a copy of a tenant’s fire risk assessment, and if it isn’t provided,they will claim for the cost of getting a new one done. Since a fire risk assessment related to both the nature of the property and the way it’s used, it will almost never be relevant for another tenant. So these should always be reviewed when a landlord has reason to suspect it’s no longer valid. This includes things like a change of tenant, or when a building becomes empty at lease end. Since the fire risk assessment would need to be renewed at lease end anyway, there would be no loss to the landlord for failure to provide one, and the cost shouldn’t be passed on to the tenant.
Thanks for sticking with us! We know that statutory compliance in leases isn’t exactly the sexiest of subjects, but when there are thousands of pounds at stake in dilapidations claims coming from alleged breaches, it’s suddenly a lot more interesting! This is also the one area of dilapidations where I see confusion between surveyors, so it’s important to be represented by a specialist dilapidations surveyor if this becomes a contentious issue.
If you’re facing a dilapidations claim and need specialist representation, or just want some advice, we would be happy to help. Just get in touch to speak to one of our friendly team of experienced dilapidations surveyors today, and we can talk you through the whole process.
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