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Dilapidations
cycle - timing
is everything

A guide for occupiers

Lease commencement/rent free
  • Sign the occupational lease
  • Agree a License to Alter
  • Take occupation
  • Plan regular maintenance to minimise lease end expenditure
  • Review your lease for maintenance and repair obligations, to ensure compliance
  • Complete interim repairs
Continue lease or exercise break
  • Consider whether you will stay or exercise the lease break
  • Seek advice from a Building Consultancy specialist on possible lease break options to maximise your position
  • Business decision regarding the lease break is required now
  • Seek professional advice to ensure the conditions of the break are complied with
    • e.g. a defined notice period of 6 or 12 months
  • If exercising a break, a detailed analysis of the break clause is required to limit your liability with the landlord
    • The break may be conditional and include a financial penalty or repair obligations
Planning/decision making
  • Commence exit planning
  • Consider a dilapidations liabilities assessment to help budgeting ahead of year end and IFRS16 compliance. Allocate budget to balance sheet.
  • Review end of lease obligations
  • Open early dialogue with landlord around options:
    • Lease renewal
    • Relocation
  • If lease renewal: this cycle starts again at the “Lease Commencement/Rent Free” stage
  • If relocation: receive and review the landlord’s Schedule of Dilapidations and Quantified Demand and develop exit strategy
Exit/renewal
  • Consider your defence strategy and negotiating position with the landlord – talk to a Building Consultancy specialist
  • Undertake works or negotiate a financial settlement
  • Yield up and hand back
  • Agree lease
  • Complete due diligence on new premises and new lease terms, to ensure future liability is limited
  • Create business space suitable for occupation which reflects your firm’s culture and working practices
    • Carry out fit-out works (Cat A/Cat B)

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