Am I Liable for Dilapidations After a Full Repairing Lease?

Question from Gill G, Am I Liable for Dilapidations After a Full Repairing Lease?

Answer from AI:

End of a 10-Year Lease: Understanding Your Rights and Options

As you approach the end of your 10-year Full Repairing Lease (FRI lease) in the UK, it’s important to understand your rights and obligations regarding dilapidations, deposit returns, and potential claims against your landlord. Here’s a breakdown of your situation and the relevant legal principles:

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Key Issues to Consider

1. Dilapidations and Surveyor Fees

• Dilapidations refer to the cost of repairs needed to bring the property up to the required standard as outlined in your lease.
• Your landlord has the right to charge for dilapidations, but they must act reasonably. If they chose an expensive surveyor despite your suggestion of a local company, you may be able to challenge the reasonableness of the fees.
• The fact that the property was in better condition when you left than when you took it on suggests that there may be limited or no dilapidations liability.

2. Deposit and Additional Charges

• Your landlord has retained your deposit and is demanding an additional £1,500, totaling £5,500. This does not automatically mean you are liable for the full amount. The landlord must provide a detailed breakdown of the charges and prove they are reasonable.
• If you believe the charges are unfair, you can dispute them. The £800 you claim is still owed may also be offset against the total amount demanded.

3. New Tenants’ Refurbishment

• If the new tenants have completely refurbished the property, this could reduce or negate your liability for dilapidations. Landlords cannot claim for repairs if they have chosen to upgrade or alter the property beyond what was required under the lease.
• You should request evidence of any dilapidations and argue that the refurbishment has eliminated any potential liability on your part.

4. Retention of Your Workshop

• If the landlord has retained your workshop without compensation, this could be considered unlawful interference with your goods. You may have a claim for compensation or the return of your property.

5. Interest on the Deposit

• Under UK law, landlords are generally not entitled to keep the interest on a tenancy deposit unless specific terms in the lease allow it. Since 2014, tenancy deposit schemes have been regulated, and landlords must comply with these rules. You may be able to deduct the interest from any amount you owe.

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Has the Law Changed for Full Repairing Leases?

While the core principles of FRI leases remain the same, there have been changes in how dilapidations and deposits are handled. For example:

• Pre-action protocols now require landlords to provide detailed schedules of dilapidations before pursuing legal action.
• Tenancy deposit schemes regulate how deposits are held and returned.
• Case law has clarified that landlords must act reasonably and cannot charge excessive fees for repairs or surveys.

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Can You Withhold Payment or Deduct the Interest?

• Interest on the deposit: You may be able to deduct the interest from any amount you owe, but this depends on the terms of your lease and the applicable laws. Check whether your deposit was protected under a government-approved scheme.
• Withholding payment: While you may want to withhold payment until the dispute is resolved, this could lead to legal action from the landlord. It’s better to negotiate or seek mediation first.

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End-of-Term Document

• Your landlord cannot unreasonably withhold the end-of-term document. If they are refusing to provide it until you pay, you may need to request it formally or seek legal advice. This document is important for resolving disputes and ensuring you are not held liable for unnecessary charges.

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Next Steps

1. Request a detailed breakdown of the £5,500 demanded by the landlord. Challenge any unreasonable charges, especially the surveyor fees and the interest on the deposit.
2. Highlight the improved condition of the property and the fact that the new tenants have refurbished it, which may eliminate your liability for dilapidations.
3. Seek compensation for the retention of your workshop.
4. Consult a solicitor specializing in commercial property law. They can help you negotiate with the landlord or pursue legal action if necessary.

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When to Seek Legal Advice

• If the landlord refuses to provide the end-of-term document or continues to demand unfair charges.
• If you believe the landlord has unlawfully retained your workshop or is withholding your deposit unfairly.
• If you need help understanding your rights under the lease or navigating the dispute resolution process.

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Additional Resources

• GOV.UK: Tenancy Deposit Protection
• Property Litigation Solicitors

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By taking these steps, you can protect your rights and potentially reduce or eliminate the amount you owe. However, this is a complex area of law, and professional legal advice is highly recommended to ensure you achieve the best possible outcome.