A leading property litigation lawyer has said that the economic uncertainty caused by Brexit could create an increase in the number of dilapidation claims in the coming years.
Tim Rayner, partner and joint head of Real Estate disputes at Irwin Mitchell, said:
Expert Opinion“It is a widely held view that disputes increase in a weak economy. Dilapidations claims are no different, but there are ways in which landlords and tenants can prepare and protect themselves." Tim Rayner - Partner
According to the expert at the national firm, tenants may cut back the amount they spend on maintaining their premises which will almost certainly heighten the risk, and size, of subsequent dilapidations claims. At the same time, landlords are more likely to do only those works required to relet, as opposed to embarking on costly refurbishments.
Expert Opinion“From a landlord’s perspective, the more subtle impact of the intention to do only what is needed to relet is that there is likely to be a greater overlap between the works actually undertaken and the works the tenant should have done in compliance with its lease obligations.
“That closer link between the costs of works and the tenant’s lease obligations may further encourage landlords to pursue their claims, especially if those costs have already been incurred.
“For tenants, that closer alignment between the works the tenant should have done and the landlord’s intentions means that the so-called ‘cap’ on damages imposed by section 18 of the Landlord and Tenant Act 1927 could be far less relevant. The claim may turn only on the common law assessment, with arguments about the extent of the disrepair, method of repair and reasonable costs being at the forefront. In effect, the landlord’s claim may actually be more difficult to defend.”
Tim Rayner - Partner
Tim predicts that whilst parties may fight harder in a weak economic climate, mediation may become more appealing as a means to resolving disputes more quickly and cheaper than court proceedings.
Tim recommends a number of ways in which tenants and landlords can protect themselves. For tenants, this includes checking, prior to signing up to a new lease, whether any service charge items are likely to need significant upgrade.
Part of his advice for landlords includes being proactive and reviewing all your leases 12-18 months in advance of expiry in order to preserve the right to pursue interim remedies should they prove appropriate.
Addressing both parties, Tim adds:
Expert Opinion“It is important to choose your professional advisers carefully and make sure they have the necessary skills and experience to take the matter all the way if that is what is required to achieve the best overall outcome.”
Tim Rayner - Partner