Dilapidations Uncovered

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The RICS Dilapidations Forum has recently published the results of a survey it has carried out of dilapidations cases for core commercial properties across the UK. A survey was sent out to Dilapidations Forum Members, and 45,000 members of the RICS Construction and Building Professional Groups to collect information on claims settled between 2007 and 2009. The aims of the survey were to (1) establish the size of the UK dilapidations market, and (2) produce reliable data on dilapidations claims on a £/square foot basis for offices, retail and industrial facilities throughout the UK.

The sample size was relatively small with data being collected from 86 projects. Therefore, the results must be treated with a degree of caution. Also, some sectors and parts of the country were better represented than others. For example, although data was received from all UK regions except Wales and Northern Ireland, London and the South East represented approximately half of the dataset whilst the West Midlands data was based on a sample size of only two industrial buildings. There was, however, a fairly good balance between surveyors acting for tenants (55%) and surveyors acting for landlords (45%).

The report did produce some interesting results which can provide useful benchmarking for dilapidations settlements. It found the average final settlements for each type of property were as follows.

  1. Offices – £9.54/square foot.
  2. Industrial – £7.27/square foot.
  3. Retail – £21.54 per square foot.

The report also found that cases where landlords had carried out the works themselves attracted the highest level of damages.

Also, the report’s findings underlined the importance of obtaining professional advice on dilapidations claims. The report found there was an average reduction of 32% between the initial claim and final settlement where surveyors acted on behalf of landlords, and an average reduction of 50% where surveyors act for tenants.

Finally, in terms of size, the report estimated that the annual turnover of the dilapidations industry was £3.36bn with an estimated total number of 35,000 cases per year.

If you would like to talk to us about the issues raised by this note, please contact:

Ralph BankesSenior Solicitor, Real Estate Dispute Resolution01895 207986ralph.bankes@ibblaw.co.uk

IBB SolicitorsCapital Court30 Windsor StreetUxbridge UB8 1AB

Tel: 08456 381 381Fax: 08456 381 351

www.ibblaw.co.uk

This briefing note is only intended to provide general guidance and is not intended to constitute legal advice.

© IBB Solicitors 2011