By Mark Blenkinsop, director at CHPK Group
Interim dilapidations is a doc served by a landlord throughout a lease to inform a tenant of a breach of their restore obligations.
Interim dilapidations can convey substantial benefits for landlords seeking to protect the standard and worth of their property all through lengthy leases, which is especially essential within the current financial panorama. Nevertheless, this underused mechanism is usually misunderstood or seen as a punitive motion. It’s essential to rework outdated perceptions and normalise the follow of interim dilapidations within the industrial actual property sector, not simply to avoid wasting pointless battle but additionally substantial prices.
Higher asset administration
The core objective of interim dilapidations is to make sure efficient property upkeep. Due to this fact, they need to solely embrace objects that may both trigger additional harm to the property, have a wider impression on different folks outdoors the property, or laws breaches. A principal benefit is that these schedules allow the identification of any potential issues early which, if left unchecked, may grow to be progressively worse and result in far greater repairs and main price implications additional down the road, similar to corrosion, or in depth roof repairs and many others.
It’s stunning that that is such an underused mechanism and never normal follow. Partially, this comes all the way down to unfavorable perceptions. An interim schedule of dilapidations, in contrast to terminal dilapidations, is served by landlords in the course of the lease time period somewhat than on the finish, outlining any disrepair and centered on making certain the optimum situation of a property all through a lease. Whereas this will sound like a useful strategy to keep property by avoiding critical deterioration within the longer-term, interim dilapidations have historically been perceived as an adversarial act. Trade adoption might also be restricted as a result of asset managers and landlords both haven’t any information of the existence of interim dilapidations or lack the time and sources to learn from them.
The trade should take a extra constructive strategy in the direction of interim dilapidations as a useful gizmo for restore and upkeep. Landlords can lengthen the lifetime of properties, safeguarding portfolios and asset worth by holding them in optimum situation all through leases. Tenants, in the meantime, have the chance to plan forward for any funds required to conduct repairs – gaining extra management of the scenario and higher price efficiencies, somewhat than receiving one giant invoice on the finish.
Efficient threat administration
Given the UK’s present financial local weather, there’s a greater threat of receivership exercise available in the market. In accordance with the most recent information from the Insolvency Service, month-to-month firm insolvency figures to September 2025 had been barely above the identical interval in 2024.
With the ever-present chance of occupiers getting into administration, landlords want to make sure that they don’t seem to be left with massive dilapidations liabilities at lease finish. To mitigate the dangers, it’s extra essential than ever for landlords to take a proactive strategy on the subject of the situation of their properties, not solely on the very finish but additionally in the course of the lease. This appears the logical strategy to safeguard property, much more so when taking into consideration that some leases can run as much as 15 years lengthy.
Altering outdated mindsets
What must occur to alter ingrained attitudes in the direction of interim dilapidations and see them as a drive for good? First, a component of schooling for the broader trade to know that they don’t represent a hostile doc or a penalty, however somewhat a signposting of how to make sure properties stay in good situation – which is in everybody’s finest pursuits – facilitating higher planning and resilience. Interim dilapidations is usually a sensible technique at a time of unsure financial outlook, too.
Second – and that is very important – interim dilapidations ought to emerge from a collaborative course of between landlords and tenants, based mostly on early engagement, somewhat than an surprising sting. This is not going to solely construct stronger relationships however make sure that each profit and meet their respective obligations, in the end stopping advanced and costly disputes on the finish of tenancies (or needing to go down excessive avenues such because the Jervis v Harris clause, or Part 146).
Flipping outdated mindsets round interim dilapidations and inspiring nearer collaboration and engagement between landlords and tenants can produce other constructive knock-on results, similar to incorporating environmental and sustainability concerns into the dilapidations course of earlier on – a key subject for a sector in pressing want of decarbonisation to align with nationwide targets.
As an trade, we have to recognise that, when used accurately, adopting this underused mechanism can carry a number of advantages for all sides.
