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2020 is a spike year in the UK for expiries and tenant break options in leases of commercial and leisure properties. In this pandemic climate, more of these events are becoming exits, than lease renewals. As such, there is rapidly increasing demand for dilapidations advice from both landlords and tenants.
There are distinct types, or disciplines, of chartered surveyor. Dilapidations are fronted by chartered building surveyors. Their specialism is to identify the extent of disrepair, poor decoration and failure to reinstate alterations, and price fixes. The aggregated cost of all the necessary works, plus fees for managing the contract etc., becomes the amount of the landlord’s ‘claim’, to which might also be added loss of rent etc.
The tenant employs their own chartered building surveyor to negotiate towards settlement.
THIS is where the other - our - key type of chartered surveyor becomes crucial. This is the Valuer, also called a General Practice (GP) surveyor, or a chartered valuation surveyor. Our specialism is the transacting and open market valuation (for rental, or sale) of commercial & leisure properties.
The law dictates that the amount of damages payable in dilapidations claims will be the lower of the Cost of Remedial Works (negotiated between the chartered building surveyors) OR the amount by which the property’s value has been reduced, or diminished, as a consequence.
Usually this is far less (as explained below, and in the body of this website).
Tenants therefore need what is called a Diminution Valuation (DV) by a valuer, to ensure that the Cost of Works settlement negotiated by their chartered building surveyor, even when considerably less than initially claimed by the landlord, is not more than should actually be paid out.
Landlords too often need a DV, either to rebut an opportunistic one presented by a tenant, or as is required by the Dilapidations Protocol
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