Pictured above: Gavin Stephens
Birmingham based Fusion Building Consultancy is reporting a
marked increase in dilapidations with many companies consolidating
their buildings or taking advantage of better deals elsewhere.
"Dilapidations has always been a good bread and butter revenue
stream for the business, but in recent months we have seen a three
fold increase in work from both the landlord and tenant side.
"Retail and manufacturing have been the main sectors, with many
retailers looking to contract their businesses. We have also had a
lot of claims on secondary high street locations."
In a more difficult market when cashflow is tighter,
dilapidation costs become even more critical as both parties look
to gain maximum advantage in settling claims. The landlord wants
the maximum return to use as a carrot for the next occupier. The
tenants want to incur as little cost as possible.
"Many occupiers are using the argument of diminishing property
values and suggesting that even if the dilapidation work was
carried out, the building would not gain in value. Our advice would
always be that you need to take advice early, so that a clear
approach and strategy can be developed to achieve a fair
outcome.
"Landlords in the main will always negotiate and try and do a
deal. Often they want a quick settlement, as many of them will use
the money to do up the building for the next tenant, or use it
towards a rent-free incentive. As long as both parties are
realistic in their expectations, most claims can be resolved
amicably without going to court."
At all points in the process, reliable records and good
documentation will support a tenant or landlords' claim and assist
their strategy. The side with the best records will almost always
win.
"You really have to understand how to play the game with
dilapidations," adds Gavin. "Whilst employing a dilapidations
surveyor might seem like an added cost, they have the knowledge and
expertise to get the best financial result. When some dilapidations
costs can go into thousands and on occasions millions, the benefit
of getting a true expert cannot be overstated."