Commercial property tenants can save as much as 50% on dilapidation costs at the end of their leases by doing the repair and refurbishment work themselves, rather than reaching a financial settlement with their landlords, according to KWB’s Adrian Southall, a leading Birmingham office fit out and project management specialist.
Adrian Southall, Director of KWB Workplace, the consultancy arm of KWB Birmingham commercial property agents, says that by appointing an independent expert to review the necessary work and appoint contractors, occupiers can save themselves thousands of pounds.
Adrian said:“The dilapidations bill for tenants to repair, reinstate and decorate their premises at the end of a lease can run into hundreds of thousands of pounds, even if they have a Schedule of Condition which documents the state of the premises when the lease started. It’s often unexpected as well, as tenants are focusing on their new premises.”
Many tenants do not realise that landlords’ bills can be challenged and reduced by a building surveyor and that, with planning, even bigger reductions can be made by undertaking the work themselves.
Adrian continued: “We have saved clients well over 50% on the initial demand made for dilapidation costs by landlords, by carrying out our own surveys and taking on independent contractors to carry out the necessary work, rather than making a financial settlement with the landlord.
“An independent survey will often reveal that the tenant has actually carried out improvements which the landlords’ surveyors have asked to be removed. One such example was the installation of an air conditioning system which enhanced an office, for which the proposed bill to remove, as part of the dilapidation costs, was £40,000. We successfully argued that this was an investment to the betterment of the premises, that the air conditioning system should be left intact and that there should be no payment for this.
“We also consistently find that the quotes we get from contractors to carry out repair work are significantly lower than those supplied by the landlord. Appointing an independent consultant to oversee this process, reduces management time and cost and can result in substantial savings.”
KWB Workplace warns occupiers that it is very important to have a Schedule of Condition in place before commencing a new lease.
He says: “This will help save money at the end of the lease as a Schedule of Condition ensures that the tenant is liable only for alterations and damage caused by them – mitigating potential dilapidation costs. Without a Schedule of Condition, the landlord can claim that the tenant is liable to pay for all repairs to the premises at the end of lease, even if they were not responsible for them.”