To repair or not

The problem

Your leasehold premises are not in first-class repair and decor. You have carried out alterations and the end of your lease is approaching.

The Law

Your lease and any licence for alterations sets out the obligations relating to repair and decoration and reinstatement, with which, on the face of it, you must comply.

If the landlord wishes to enforce repairing obligations before the last three years of the term, and serves notice of disrepair under section 146 of the Law of Property Act 1925, the notice has to advise the tenant that he may serve a counter-notice. If the tenant serves such a notice, the landlord has to obtain leave from the court to pursue its remedies against the tenant.

The actual liability at the end of the lease will depend on what is to happen to the property - in particular, if the tenant is vacating - and the landlord's intentions.

Expert advice

First of all, check what the lease requires the tenant to do. If your premises are part of a larger building, your obligation will probably be limited to the "internal skin" - plaster, ceiling and floor finishes, window glass and frames and external doors - plus the street frontage.

Sometimes, a tenant's obligation is limited to handing back the premises in no worse a condition than when let. Such a condition will have been recorded in a schedule, often using photographs.

Legal phrases such as "good and substantial" or "good tenantable" repair impose different standards.

In practice, where a tenant renews a lease and remains in occupation, the landlord is not overly concerned about the state of repair and is unlikely to insist on full compliance.

If there are matters of concern, remedying them within a specified period may be included as a specific (enforceable) obligation in the new lease. Reinstatement is not an issue in these circumstances.

The real problems for a tenant arise if he is vacating at the end of the lease. However, if the landlord is requiring possession to demolish or carry out substantial alterations, the tenant is relieved of all liability to repair, redecorate and reinstate. In all other circumstances, the landlord is entitled to require full compliance with the obligations of the lease.

The landlord's surveyor will be instructed to prepare a full schedule of dilapidations, which may be priced, generally at significantly more than any estimate obtained by a tenant. The landlord may require the reinstatement of the premises to the original layout. However, it may not require reinstatement if alterations will be of benefit to future tenants - for instance, the installation of air conditioning.

It is generally better for a vacating tenant to approach the landlord well before the leaving date and agree the work needed to be done. An early approach is essential so that there is sufficient time to carry out work before the end of the lease.

If the lease is excluded from the protection of the Landlord and Tenant Act 1954, no notice will be required and the tenant must be even more vigilant about tackling his obligations early, without any reminder of the end of the term.

If work is not done during the term and the landlord carries out the work itself, the tenant can be liable to pay not only the cost of the works but also the equivalent of rent during the period necessary to complete the work. This "rent" will be at the open market rate at the time - in a rising market, probably significantly more than the rent at the end of the lease.

Even if there is want of repair, it may not be necessary to do remedial work. The landlord may be prepared to settle for a cash sum.

Check list

• Think about what you may need to do at least six months before the vacation date.

• Find out what your obligations are under your lease and any licence for alterations.

• Take expert advice from a surveyor.

• Make an early approach to the landlord.

Beware!

If you delay, you could find yourself paying the landlord's price for repairs, decoration and reinstatement, and rent, after you have left the property.

Contact

Clare Foinette
Rooks Rider
020 7689 7000
E-mail: cfoinette@rooksrider.co.uk