Dilapidation Disputes To Rise As 230,000 Sq Ft Of North West Office Leases Set To Expire In First Six Months of 2015

Number Of Office Leases Set To Expire Up 40% Compared to 2012


David Shirt, Press Officer | 0161 838 3094

Property lawyers at Irwin Mitchell are predicting a significant rise in the number of dilapidation disputes across the North West following research which reveals that 202 office leases relating to 228,000 sq ft of office space are due to expire in the first six months of 2015.
The data from EGi*, which has been analysed by law firm Irwin Mitchell, states that 45 (22%) of the leases cover periods going back 10 years. In total the leases are estimated to be worth over £90m.

The data points a big increase in the number of leases due to expire compared to the same period three years ago.
During the first six months of 2012, there were 144 office leases which expired with a value of £66.5m. Here the leases related to 193,199 sq ft with only 26 (18%) involving tenancies of more than 10 years.
The trends identified across the North West are replicated within the UK where 41% more office leases are expected to expire in the first six months of 2015 compared to 2012.
The issue of dilapidations relates to the obligation that tenants face at the end of the lease to return the property to the landlord in a good state of repair, condition and decoration. 
On large premises, dilapidation claims can in some cases run into millions of pounds and can have a considerable impact financially as the business will usually have taken on additional costs and responsibilities with new offices.
According to Irwin Mitchell, one of the key reasons for the increase is the office development boom 15-20 years ago which is now resulting in a rise in the number of leases that are coming to an end. 
Chris Perrin, Property Litigation Partner at Irwin Mitchell in Manchester, said:

Expert Opinion
We’ve seen a steady rise in the number of dilapidation disputes and I expect to see the numbers continue to go up as the number of long term leases come to an end. Whilst some organisations will undoubtedly renew their lease, there is currently a lot of movement in the North West with new developments such as Manchester’s One St Peter’s Square close to completion and other schemes set to commence shortly.

“Some of these dilapidation claims can be significant with complex legal issues to resolve for both landlords and tenants and it is vital that businesses are fully prepared to deal with the many issues that can arise.”
Christopher Perrin, Partner

Earlier this year, Irwin Mitchell published its own report into business occupancy trends and revealed that almost 20% of businesses in the UK were looking to relocate or expand their current business premises over the next 12 months.
* Estates Gazette