At the end of a commercial lease, a tenant usually has to hand the premises back in the condition the lease requires, and that almost always includes redecoration. Dilapidations are the breaches of those obligations: the repairs, redecoration and reinstatement a tenant has not carried out. Left unaddressed, they can lead to a claim from the landlord that is often far more expensive than simply doing the work, which is why it pays to understand your redecoration obligations well before the lease runs out.
Halls Decorators provides commercial and office decorating across Yorkshire, Lancashire and Greater Manchester, and regularly helps tenants bring premises back up to standard at lease end. We explain what dilapidations are, what redecoration typically involves, and how to approach the end of a lease without being caught out.
What are dilapidations?
Dilapidations are items of disrepair or breaches of the condition-related covenants in a lease. In plain terms, they are the gap between the state the premises are in and the state the lease says the tenant must leave them in. They usually cover three things: repair of damage or wear, redecoration to the required standard, and reinstatement, which means removing any alterations the tenant made and putting the premises back as they were.
A landlord generally sets these out in a schedule of dilapidations, prepared by a surveyor, which lists the alleged breaches and the cost of putting them right.
What does the lease say about redecoration?
The detail that matters is in your own lease, so that is always the starting point. Most commercial leases contain a decorating covenant that requires the tenant to redecorate at set intervals during the term, often every three to five years internally and more frequently for external surfaces, and again in the final year before the lease ends. Many specify a standard too, such as a given number of coats of good quality paint, and some require colours to be agreed with the landlord where the tenant wants to change them.
Alongside this sits the “yield up” clause, which sets out the condition the premises must be returned in. Reading these clauses early, rather than in the final few months, gives you time to plan the work instead of rushing it.
What does redecoration at lease end usually involve?
Redecoration to meet a lease covenant is more than a quick coat of paint. It typically means preparing and repainting walls, ceilings and woodwork to the specified standard, and making good the everyday marks of occupation such as holes left by fixings, shelving and signage. Where the tenant has altered the space, for example by adding partitions or branding, reinstatement work brings it back to its original layout and finish.
Making good and redecoration often go hand in hand with minor repairs and maintenance, since surfaces usually need patching before they can be painted to a professional standard.
How does the schedule of dilapidations work?
A landlord may serve an interim schedule during the term or, more commonly for redecoration, a terminal schedule at or near the end of the lease. For commercial tenancies, claims for this kind of damage are governed by a pre-action protocol that sets out how the landlord and tenant should exchange information and try to resolve matters before any court action. The schedule is usually prepared by the landlord’s surveyor and priced, and the tenant is entitled to respond rather than simply accept it.
It is worth knowing that the law can limit what a landlord actually recovers. The amount payable for breaches of a repairing covenant is capped by reference to the loss in value of the landlord’s interest, and no damages are due where the premises are to be demolished or substantially altered soon after the lease ends. This is a technical area, so advice from a chartered building surveyor or solicitor on your specific schedule is money well spent.
Should you do the work or pay the landlord?
Tenants broadly have two routes:
- Carry out the redecoration and reinstatement themselves before the lease ends
- Negotiate a financial settlement with the landlord in place of the works
Doing the work yourself is frequently the cheaper option, because you control the contractor and the cost rather than paying a surveyor-priced figure that may include fees and contingencies. It also removes the items from the schedule altogether. The right choice depends on your lease, the timescale and the condition of the premises, which is another reason to take professional advice early.
How should tenants prepare for lease end?
The tenants who come out of this best are the ones who start early. Read the lease and note the redecoration standard and the yield-up requirements, ideally a year or more out.
Arrange a condition survey if you are unsure where you stand, get the works scheduled with enough time to complete them before the term expires, and keep the premises reasonably decorated throughout rather than letting everything pile up at the end. A little planning turns a stressful deadline into a manageable job.
Meeting your redecoration obligations with Halls
Carrying out end-of-lease redecoration to the standard a lease demands is exactly the kind of work Halls Decorators does day to day, from office decorating to larger commercial schemes. The team can work to a schedule of dilapidations or a lease specification and get the premises ready for handover on time.
If you have a lease coming to an end and redecoration to sort out, you can contact the team to discuss what is needed.