Introduction
Dilapidations are associated with buildings that aren’t in good condition. Perhaps with smashed windows that aren’t in liveable condition. Therefore, whenever the term is used with tenants, it isn’t a surprise that tenants are confused and left wondering what dilapidations really are.
Read this article so you know how they work. Whenever there are fees involved in a property it is necessary for a landlord to have the right education on the topic. The subject of dilapidations doesn’t have to be at all confusing for landlords or tenants and it can be a simple part of the tenancy regulations process.
When dilapidations are issued professionally and legitimately, there doesn’t have to be much of a dispute and it may be that a tenant actually completely agrees with the dilapidations and is expecting them from the landlord.
What does dilapidation mean?
The definition of dilapidation refers to the process of falling into decay or disrepair. Landlords know that this is a possibility with their properties so they make agreements between them and the leaseholder in case there is a lease covenant and most of these covenants are evaluated at the end of a lease.
What are dilapidations in property?
When this is applied to property, it means the tenant has failed to comply with the repairing clauses of the lease. As a result, there has to be a fine paid when they leave the property. This fine is enforced by issuing a Schedule of Dilapidations to a property.
In general, a lease in a property will go over all the things that a landlord expects a tenant to provide as part of their tenancy in terms of maintenance and repairs. If these obligations aren’t met by the tenant, this is where dilapidations can be used. As well as dilapidations being between landlords and tenants, they can also be between freeholders and leaseholders.
What is the difference between dilapidations and a security deposit?
Security deposits are paid upfront at the start of a tenancy when a tenant moves into a house. This is to protect the landlord in case there are any damages to the property or a tenant has rent arrears. As a result, this security deposit may be kept by the landlord if they feel the landlord has left the property in disrepair.
In contrast to this, a landlord has to issue a tenant with dilapidations after the lease has come to an end so there is no money paid upfront like in a deposit. Also, security deposits are protected by tenancy deposit schemes in the UK whereas dilapidation is just a notice that has to be issued more so as a fine. For more on this click here.
What is the difference between PPM and dilapidations?
PPM stands for planned preventative maintenance which is a set of regulations a landlord has to abide by in order to comply with safety regulations. For example, conducting a gas safety check or an electrical safety check.
A landlord may specify in a tenancy agreement that it is the tenant’s responsibility to conduct PPM as part of the dilapidations when they leave the property. However, they have to make sure that the PPM happens if the tenant refuses as this would then mean the building is unsafe and the landlord would be breaking the law.
What is a schedule of dilapidations?
A schedule of dilapidations refers to the document a landlord gives to a tenant in order to make a valid claim that the tenant owes the landlord money for allowing the property to fall into disrepair.
The document should contain what kind of repairs should be done to the property, the specific agreements regarding the lease of the property as well as the obligations that have been enforced in the property to make sure the property looks a certain way for the whole of the tenancy.
The formal document will report the breakdown of all the repairs or remedial works that have to be conducted in the property. This is necessary because if the works aren’t carried out then the property may not be able to be rented out to anyone else. This is why dilapidations are important because they protect the landlord from having tenants who don’t take care of their property.
Even if the tenant doesn’t take care of the property, they will be able to use the money from the dilapidation to conduct repairs. This would be agreed upon in the lease to return the house to its original condition.
How should dilapidations be served to tenants?
If a landlord feels like a leaseholder or a tenant hasn’t complied with the covenants of the lease agreement, the landlord would have to hire a surveyor to do an inspection of the property. If they are qualified to do so they can also do this themself. Sometimes, the landlord can deduct this cost of conducting inspections from the dilapidations.
In the document issued to tenants called the schedule of dilapidations, the cost of repair and the details about how exactly to conduct repairs must be included in the document. On top of this, the document must be served to the tenant within 56 days of the end of their tenancy
The document should also consider if the tenant has conducted some work or none at all. For example, the document should be appropriate to the extent of the work that is needed based on the work the tenant has done already. It may be the case that the tenant has done some remedial works that cost money but they are still in breach of the covenants of the lease as they are not quite up to standard.
This should be looked over and the tenant and landlord should then come to a conclusion based on all the parts of the property. If there is anything that they cannot come to a conclusion about, then it may be necessary to go to court to settle those issues.
In general, the covenants that make up dilapidations are listed below. Some or all of these clauses may be involved in the agreement.
Covenants to repair and redecorate a property
This covenant does what it says on the tin. The repairing covenant in a property asks a tenant to repair or redecorate a property before they can move out. This means if this covenant is in place, even if repairs were needed in the first place before the tenant moved in and it was only a short let, the tenant will need to conduct repairs.
As you can imagine, it is, therefore, necessary for a tenant to check this part of their lease agreement in detail because they may have signed an agreement that states they have to repair a property that is in disrepair in the first place. This highlights the importance of involving solicitors in designing any tenancy agreement where dilapidations are in place.
Schedule of condition survey
Whenever there is a schedule of conditions, this is a detailed recording of the property that is related to the structural integrity of the property. It is also sometimes referred to as a Simple Format.
This schedule of conditions of the property must be given to the leaseholder or tenant at the beginning of the tenancy. Showing this document to the tenant at the start of a tenancy may be a great way to make sure they are aware of the condition of the premises before they move in as it may be brought forward with the dilapidation if it is issued later on.
Covenants for reinstatement
Covenants for reinstatement show if the landlord is required to be reinstated or if the remedial works can stay there until the end of the tenancy agreement. In other words, if the landlord has the right to repossess the property straight away with a repaired property or if they have to wait a while for the tenant to conduct repairs after the tenant has moved out.
Sometimes, there is no reason for the landlord to be reinstated in which case the tenant of the property can give the property back to the landlord with some of or no alterations made to the premises. The reinstatement of any alterations that are required by law cannot be enforced in this case.
In addition, the majority of reinstatements mean that landlords have to give the tenant in the property notice that shows them the time that they have to do the alterations. This may have to be reinforced with a notification system where important dates for these alterations are reminded. If a landlord doesn’t stay on top of this they may lose their rights to get the tenant to reinstate the property.
Finally, the licence that must be given so that alterations to the property can be enforced should always be examined. If the licence differs from the licence on the lease then there can be a conflict regarding what the tenant must do in the property. So check carefully if the reinstatement clauses mirror the licences in the tenancy agreement as this can have reinstatement costs too.
Re-entry clause
In most leases in the UK, there is a clause involved which makes the landlord able to enter a property to conduct repairs or remedial works if a tenant isn’t able to repair the property themself because of financial issues.
As a result, there is a need to include this clause in all agreements because this is a possibility for all tenants to sign a tenancy agreement with a dilapidation agreement included.
This is great for landlords because if this re-entry clause has to be activated, then the landlord can claim this expense as the recovery of debt rather than damages and they won’t have to comply with the laws around damages as a result. Debt recovery is seen as generally more flexible as it is a tax-deductible business expense.
Quick tips to do with dilapidations
Whenever you are issued with dilapidation as a tenant or are issuing it as a landlord, you need to make sure you take your time and do not panic with the process to ensure the best outcome happens.
Tips for landlords
First of all, the landlord should never feel immoral for issuing dilapidations because, without them, it may be that the property cannot be relet and the property, therefore, requires investment out of your own pocket to fill the property with tenants again.
In addition, speaking to dilapidation specialists who may also be specialised surveyors may help you as a landlord to determine the costs you could be facing if you don’t issue dilapidations. Helping you come up with more suitable covenants in the dilapidation agreement as well.
Tips for tenants
Dilapidations point out the conditions of the property during a leasehold tenancy and how they should be maintained. Commonly, this includes rules around telling the tenant to redecorate the premises and return the property to the same order it was at the beginning of the tenancy. Therefore, the first step you should follow is to look at these rules carefully as a tenant.
What happens if a tenant refuses to comply with dilapidations?
The refusal to comply with the schedule of dilapidations is an option that a tenant can take. This is usually where there is a disagreement between the landlord and the tenant. For example, it may be the landlord thinks the tenant should have taken care of parts of the property that are written in the tenancy agreement but the tenant disagrees.
If this happens, legal action can be taken by either party. Through attending a small claims court here on the government website, a tenant or landlord can bring the disagreement to a close and the amount that is payable through dilapidations can be decided.
In summary
Dilapidations are both confusing and can have negative connotations attached as they are often seen as a fine for tenants. However, if both landlord and tenants understood the terms of a dilapidation agreement in more detail, there would be fewer disagreements when dilapidations did arise and fewer dilapidations would be issued in the first place.
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