Planning Your Exit: Why a Dilapidations Liability Assessment Matters
Many occupiers are reassessing whether their current premises still meet operational and financial needs. If you are considering serving notice or allowing your lease to expire, it is essential to factor potential dilapidations liabilities into your exit costs from the outset.
What is a Dilapidations Liability Assessment?
A Dilapidations Liability Assessment is an early review of your lease obligations and the likely end-of-tenancy costs associated with returning the property in accordance with those obligations. It typically considers:
- Repairing covenants: the standard of repair required during and at the end of the lease.
- Decorative covenants: whether redecoration is required and to what extent.
- Reinstatement covenants: obligations to remove tenant fit-out or alterations and reinstate the original layout/finishes.
By identifying these requirements against the current condition of the premises, the assessment provides a reasoned forecast of potential dilapidations exposure.
Why undertake the assessment early?
Timing is critical. Commissioning an assessment well in advance of lease end enables you to:
- Budget accurately for exit costs and avoid last‑minute surprises.
- Decide whether to complete works, negotiate a financial settlement, or a blend of both.
- Programme any reinstatement or repairs to minimise disruption to your operations.
- Gather evidence, clarify ambiguities in the lease, and reduce the risk of inflated claims.
- Align decisions on notice periods, break options, and relocation with a clear cost picture.
What the assessment involves
- Lease review: analysing repairing, decoration, reinstatement, statutory compliance, and yield‑up clauses, plus any schedules of condition.
- Site inspection: identifying defects, disrepair, and alterations relative to lease obligations.
- Costing: producing an itemised estimate for works and/or likely settlement values.
- Strategy: advising on the most cost‑effective route to compliance and negotiation.
Practical next steps
- 6–12 months before lease end (or earlier if exercising a break): commission the assessment.
- Collate key documents: lease, licences for alterations, schedules of condition, previous reports, and plans.
- Consider operational impacts: timings for decant, contractor access, and any phased works.
- Engage early with the landlord: early dialogue often leads to pragmatic outcomes.
How we can help
An early Dilapidations Liability Assessment allows tenants to plan with confidence and minimise exposure. If you are reviewing your premises or approaching a lease event, our Building Surveying team can provide a concise assessment and a practical exit strategy tailored to your lease and occupation.
To discuss your position or arrange an assessment, please contact the Building Surveying team at Vickery Holman.
