Property Disputes Set To Soar As Office Leases Worth £2.5 Billion Come To An End

41% More Office Leases Expected To Expire In First Six Months Of 2015 Compared To 2012

16.12.2014

David Shirt, Press Officer | 0161 838 3094

Property lawyers at Irwin Mitchell are predicting a significant rise in the number of dilapidation disputes after revealing that almost 2,500 office leases across the UK worth a total of £2.47 billion are due to expire in the first six months of 2015.

The data from EGi*, which has been analysed by Irwin Mitchell, suggests that the leases which are due to expire across the UK in the next six months cover almost 3.6 billion sq ft of office space.

Out of all the leases expected to expire between January and June 2015, 12.5% are long-term tenancy agreements for 15 years or more.

Irwin Mitchell’s analysis also points to a large increase in the number of leases coming to an end in the next six months compared to the same period three years ago.

During the first six months of 2012, the 1,775 office leases which expired covered a total of 2.2 billion sq ft and had a value of £1.1 billion. Less than 10% of the leases involved tenancies of more than 15 years.

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 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 on in the number of leases coming to an end. 

Paul Firth, National Head of Real Estate at law firm Irwin Mitchell, 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, many will look to move into newer or larger premises.

“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.”
Paul Firth, 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