Wedlake Bell commercial property partner Suzanne Gill is
providing a series of articles for HR professionals to give them a
better understanding of the issues accompanying surplus premises
– a task that often becomes the responsibility of HR. In the
second in this series, Suzanne looks at the unexpected aspects of
bringing leases to an end.
Most English leases oblige the tenant to hand their premises
back to the landlord in good repair and condition. This can mean
giving them back in a better state than they were at the start of
the lease. The lease will often specify redecoration in the last
year of the term, commonly allowing the landlord to select the
colours used, require new carpets and for any alterations, such as
partitioning, to be removed. These works are usually called
Sometimes the lease puts limits on the repairing obligations.
The lease might say that the repair should be no worse than the
state recorded in a schedule of condition, usually a collection of
photos taken at the start of the lease term. This is an important
concession for a tenant, and the schedule of condition should be
stored carefully with the other title deeds.
The works to restore the premises can be expensive and should be
provided for in the tenant company's accounts. Often (but
not invariably) the cost is negotiated between the parties, and the
tenant pays the landlord money to do the relevant works after the
tenant has moved out. However there are important restrictions on
what the landlord can charge for, both as a result of case law and
contained in the Landlord and Tenant Act 1927.
If the landlord is going to demolish the building when the lease
ends, he can't require the tenant to pay for the cost of
redecorating it. Equally if the landlord plans to improve the
building over and above the standard of repair required by the
tenant, the landlord can't charge for tenant works which would
be superceded by the landlord's plans. For example,
should an external cornice be returned clean and painted, or fully
restored to Victorian glory? Where there are two ways of carrying
out a certain repair, the landlord can only charge for the cheaper
method. It's a complex area so getting specialist advice is
Best practice suggests that the discussions about the condition
of the premises should start six months before the end of the
lease. On a practical level is better to find out what the landlord
requires than have your facilities management team spending time on
jobs that may turn out to be unnecessary. Beware of waiting for the
landlord to initiate the conversation – one cost the landlord
can claim for is rent for the period of time it will take for the
works to be done after the lease has ended.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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