Lease Renewals and Dilapidations

As a Landlord and as a Tenant, it is critically important to finalise the Lease Renewal. Particularly, for a Landlord, if the rent is to increase and for a Tenant, to finalise this process and refocus on the business being operated from the premises.

It is most likely to make commercial sense to get the Lease renewed and any increase in rent in place.  It is also important to consider the question of dilapidations. It is in the Landlord’s best interest to have a Schedule of Dilapidations prepared and to attach it to the Renewal Lease. It is generally best practice to have the Schedule of Dilapidations unpriced and just to list the breaches of repair and decoration issues and specify the remedies in respect of each. Not only would costing the Schedule be potentially contentious at the critical point of Lease Renewal, the cost of building materials and supplies has inflated significantly in recent times and so costing the Schedule could quickly become out of date.

If a Schedule of Dilapidations is attached to the Renewal Lease, the Lease itself should include appropriate wording, obligating the Tenant when to implement the remedies and over what period of time.

Addressing Repairs, Alterations and Rent Review

The other factor for a Landlord is that any alterations that have been carried out by the Tenant under the previous Lease would, on the grant of the Renewal Lease, form part of the premises. This brings options and consequences to both Landlord and Tenant. If the alterations are not recorded before the Renewal Lease, the Landlord may lose the ability to require the Tenant to reinstate those alterations. Depending upon the wording of the original Lease, any alterations made by the Tenant during the term of the original Lease, may also be capable of being rentalised under Rent Review Provisions in the Renewal Lease.

The issue of Dilapidations, alterations and Rent Review, should always be addressed in the Renewal Lease by the inclusion of appropriate wording, imposing obligations on the Tenant during the term of the Renewal Lease.

We work closely with our Commercial Property Lawyers and with Surveyors. The issues of Lease Renewal, Dilapidations and Rent Review should be considered during the Lease Renewal process and we can guide and advise on these issues. Retaining capital value in a property for a Landlord is important and the issue of Dilapidations and alterations should be considered at Lease Renewal.

How Pinney Talfourd Can Help

Our expert Commercial Property Litigation Team can advise both landlords and tenants on all aspects of lease renewals, including dilapidations, alterations, and rent review provisions. We’ll work with you to ensure your lease terms are clear, enforceable, and aligned with your commercial goals. Whether you’re entering renewal negotiations or resolving a dispute, we’re here to help protect your position and your property.

Contact us on 01708 511 000 to speak with a member of our team today.