8 min read
Key takeaways
- A schedule of dilapidations lists the work a landlord says a tenant must do, or pay for, under the lease.
- It’s usually served near or after the end of a commercial lease, and sometimes during it.
- Removing your alterations and clearing the unit yourself is often cheaper than paying the landlord’s estimate.
- Start early, read your lease, and take advice from a building surveyor.
If you rent a factory, warehouse, office or shop, the end of your lease can bring an unwelcome document: a schedule of dilapidations. It can list everything from repairs and redecoration to removing partitions and racking, with a price attached.
Understanding how dilapidations work, and planning your exit early, can save a lot of money and stress. This guide explains the basics in plain English.
What is a schedule of dilapidations?
A schedule of dilapidations is a document, usually prepared by a building surveyor on behalf of the landlord, that lists breaches of the tenant’s obligations under a commercial lease. These typically relate to repair, decoration and reinstatement. It sets out what the landlord says needs doing and, often, how much it will cost.
When is a schedule of dilapidations served?
- Interim schedule: served during the lease, asking the tenant to carry out work before the lease ends.
- Terminal schedule: served near the end of the lease, or shortly after, setting out the work needed to put the property back in the required condition.
- Final schedule: served after the lease has ended, usually listing the costs the landlord is claiming.
What usually appears on a schedule?
Every lease is different, but common items include:
- Repairs to the roof, floors, walls, doors and building services
- Redecoration, often required in the final year of the lease
- Reinstatement: removing tenant alterations such as partitions, mezzanines, racking, signage and fit-out
- Clearance: removing contents, waste and equipment left behind
- Making good: filling holes, repairing damage caused by fixings and removed equipment
- Compliance items, such as certificates for building services
Reinstatement and clearance items are often among the easiest for tenants to deal with themselves before handing back the keys.
Do I have to remove my alterations?
It depends on your lease and any licence for alterations you signed when the work was done. Many commercial leases require tenants to remove alterations and return the property to its original condition, but some allow certain alterations to remain, or leave it to the landlord to decide. Read the yielding up and alterations clauses carefully, and ask the landlord in writing what they want removed.
How much can a landlord claim?
In England and Wales, a landlord’s claim for breaches of the tenant’s repairing obligations is generally limited by law to the amount by which the breach has reduced the value of the property. So if the landlord plans to redevelop or refurbish anyway, the claim may be lower than the schedule suggests. The Pre-Action Protocol for dilapidations claims also sets out how the process should be handled before court.
This is a complex area, so take advice from a building surveyor or property solicitor about your own lease. This guide is general information, not legal advice.
How to reduce your dilapidations costs
- Start early. Look at your obligations at least 12 to 18 months before the lease ends.
- Get your own survey. A building surveyor can assess the landlord’s schedule and your actual liability.
- Do the work yourself. Clearing, stripping out and making good through your own contractors is often cheaper than paying the landlord’s estimate.
- Agree the scope in writing. Confirm with the landlord which alterations they want removed.
- Take photographs. Dated photos of the cleared unit help if there’s a disagreement later.
- Recover value. Racking, equipment and furniture can often be sold to reduce the cost of the strip out.
Where a clearance fits in
A professional end of lease clearance tackles the clearance, reinstatement and making-good items on a schedule: removing contents, stripping out partitions, racking and mezzanines, and leaving the unit swept and ready for inspection. Our commercial end of tenancy clearance service works back from your handback date so there’s time for inspection before the keys go back.
If your exit involves closing a production site as well, our factory closure checklist covers the wider planning.
Frequently asked questions
When does a landlord serve a schedule of dilapidations?
Usually towards the end of the lease or shortly after it ends. Landlords can also serve an interim schedule during the lease.
Can I negotiate a schedule of dilapidations?
Yes. Schedules are often negotiated. A building surveyor acting for you can review the items and costs and respond on your behalf.
Is it cheaper to do the work or pay the landlord?
Often it’s cheaper to do the work yourself before the lease ends, because you control the cost. But it depends on your lease and circumstances, so take advice.
Do dilapidations apply to short leases?
They can. Any commercial lease with repairing, decoration or reinstatement obligations can lead to a dilapidations claim, whatever its length.
Lease ending soon?
Tell us your handback date and we’ll plan the clearance and strip out around it. Find out more about our end of tenancy clearance service or see all our commercial clearance services.