Our Building Consultancy department is often called to assist with dilapidations claims which apart from a knowledge of building construction and building prices, also requires a detailed knowledge of the Landlord and Tenant Act 1927. Our Landlord and Tenant department become involved to provide advice and guidance on the issues covered by the act. One recent example of this saw cost savings to our client of £525,000, details of how this saving was achieved are below.
The property involved was an old mill previously occupied by a carpet company until they went into administration. The landlord raised a claim for dilapidations of £830,000 and our Building Consultancy team was retained by the administrator of the tenant company to contest the claim.
Our Building Consultancy department undertook an inspection of the buildings and found that they were generally in poor condition (even for their age). The landlord's claim was supported by an extensive and well prepared priced schedule of items of repair. However, our Building Consultancy and Landlord and Tenant department (following them preparing a S18 valuation) reviewed the possible approaches and concluded that whilst each item could to some extent be contested, the key in this case was to convince the landlord that he should re-cast the claim entirely. Discussions took place and the landlord was convinced to take this approach after we invoked S.18 of the Landlord & Tenant Act 1927. S.18 places limitations on any claim - the limitation being the extent to which the value of the landlord’s interest is reduced by the disrepair.
The landlord accepted that he could only realistically re-let the premises by sub-division into smaller units and demolishing a significant section of the premises to provide better access. He also accepted that the standard of repair should be reduced to one which would reflect the likely (medium term) demolition of the whole of the premises when the market became right for residential development. The S.18 valuation on this basis showed a significantly lower loss to the landlord than the original estimate of repair costs and capped the claim. Following this negotiation, the claim was settled at £305,000 which saved £525,000 and saved lengthy and costly litigation.
For more information please contact Stan Ravenhill stan.ravenhill@eddisons.com or Mark Rugg mark.rugg@eddisons.com