THE PROBLEM
My lease is coming to an end. The Landlord has served a schedule requiring me to carry out many expensive repairs. What can I do?
THE LAW
Liability depends upon your lease. It may allow your Landlord to do the work before you leave and claim their cost. Otherwise, for disrepair in breach of an obligation upon you to repair, their claim is for the cost of repairs and any consequential loss, ie. loss of rent. However, your liability is capped at the amount by which the disrepair diminishes the value of the landlord's reversion, known as the "section 18" statutory cap. In addition to the lease terms, a landlord can also claim you have damaged the premises or allowed it to fall into decay.
EXPERT ADVICE
What does the lease say? Repair, improve, renew, or rebuild? Are any of the items claimed actually the Landlord's responsibility? The lease may make them responsible for, say, the structure, or exterior, and they can only pass those costs on if the service charge allows and they have done the works in time.
What are your Landlord's plans? Has planning been applied for, perhaps to redevelop? A definite intention to pull down or structurally alter the premises, irrespective of it's condition, rendering repairs valueless, under the section 18 statutory cap wipes out a claim. Fit out plans of a new tenant could supersede your repairs, with scope for settling for less.
Is there time to do the works? You may be able to complete them for less then the Landlord claims, indeed, beware landlord's looking to make a profit by carrying out repairs through related companies. Or would offering a financial settlement cost less, based on the lowest cost of the cheapest method of repair a tenant can choose, or because the section 18 statutory cap is less? However, does your lease allow your landlord to serve notice, and then go in themselves and repair and claim back their costs, because the statutory cap will not apply against such a claim, and in this case, it may be better to start the works yourself.
Does your lease, or licence to alter make you responsible for removing alterations? If so, expect the landlord to claim these costs whether in disrepair or not. If not, they become part of the building and subject to the same repair covenants.
You will also need a surveyor / valuer to provide and negotiate repair costs, and value the diminution, which could be substantially less then the cost of the works. Indeed, if the premises could be sold at the same price irrespective of disrepair, there may be no diminution or liability!
CHECK LIST
- What do your lease and documents say?
- Was there a schedule of condition with the lease?
- What are the Landlord's plans?
- Is it cheaper to do the works, or to negotiate a financial settlement?
- Remember, you cannot avoid a claim just because the Landlord does not actually intend to carry out the repairs.
BEWARE!
If your lease did not have a schedule of condition with it, requiring you to repair to that standard, you may end up paying for putting it into a better condition then when you moved in. 'Repair' means putting it back into the condition it was in when constructed, not when your lease started, taking into account age and surroundings, and to put or keep in repair means to do so even if it was not when you moved in.
Repair should not mean improvement, but if a latent defect caused damage, and fixing the latent defect is the proper way to repair the damage that defect causes once and for all, then you could easily end up liable for the cost of handing back a building in a much better condition than when you went in or when it was built, at your great expense. For some, this advice will be too late, but for all, this should serve as a timely reminder to look carefully at the lease before signing it and most importantly, take professional advice - failure to do so could be an expensive mistake.
This article is provided for general information only. Please do not make any decision on the basis of this article alone without taking specific advice from us. stevensdrake will only be responsible for the advice we give which is specific to you.
