Surveys for Businesses

SURVEYS FOR BUSINESSES
A pre-lease survey and/or advice during your lease term
may identify unknown, expensive or dangerous items
that require attention, and thus can help you negotiate
better terms with your landlord, and reduce end of term
dilapidation liabilities.

LEASE LIFECYCLE
WE CAN HELP YOU AT DIFFERENT STAGES IN YOUR PROPERTY LIFE CYCLE.
Red – high risk
Orange – good practice
and needs consideration
Green – during – proactive
to reduce risks at end

PRE-LEASE
A pre-lease survey may identify unknown, expensive or dangerous items
that require attention, and thus can help you negotiate better terms
with your landlord.
For example, a survey might be used to:
• Identify problems that require
attention, and help you negotiate that
the landlord undertakes any such
works prior to you signing the lease; or
• Help you negotiate a financial capital
contribution from the landlord
equivalent to the cost of remedying the
defective problems, or, an equivalent
rent-free period; or
• Allow you to negotiate that you are
not to be held responsible in future
for repairing certain items, by the
agreement of a “Schedule of Condition”
being attached and referenced in the
new lease.
A pre-lease survey can help alert
you to any questions that may need
answering regarding the demised
premises, alterations left insitu by the
former tenant, and potential breaches of
statutory requirements. It is also a great
opportunity for our surveyors to have
consideration of your occupational fitting
out requirements.
We work with your legal advisor to
consider the implications your proposed
draft lease will have upon your business,
and, working alongside them, we can
help ensure your lease terms are drafted
in the best possible way to serve your
needs and reduce your liabilities.
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WHAT IS A SCHEDULE OF CONDITION?
A schedule of condition is a document that simply records
the condition of a building at a particular moment in time.
The purpose is to record the condition of a building before lease commencement – prepared
on behalf of a tenant to limit their future dilapidation liabilities.
A well-advised tenant who has a schedule of condition prepared can save thousands of
pounds at lease termination by requesting a schedule of condition be attached to their lease.
The key to this document is firstly, having one prepared by a Chartered Surveyor. The second
equally important part, is to ensure that your legal advisor drafts the lease in such a manner
to include and reference so as to the Schedule of Condition.
There is no point simply having a Schedule prepared for it to sit in a drawer – it MUST be
referenced in the lease, and your repairing clause wording MUST be worded to reference the
schedule to protect your interests.
Ideally, this should seek to try and recover as a minimum your repairing obligations, but also,
if possible, try and have it referenced to limit future redecoration liabilities and possibly,
restrict liability for removal of alterations if these have been left insitu by an earlier outgoing
tenant.
A typical restriction in a lease might be worded something like this “The Tenant must keep
the Premises in no worse state of repair and condition than they were in at the date of the
Schedule of Condition that is attached for evidential purposes”
At lease expiration, the schedule of condition is re-examined to see what items of disrepair
were already present at lease commencement, and items proven to have existed before the
lease started will therefore be ‘struck out’ of the Landlords claim.
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CLAUSES TO LOOK OUT FOR
Check out our top 6 lease clauses to look out for:
REPAIR
One of the key clauses in any lease – and is the main one that catches people out. People often forget about maintenance and repairs during occupation
and so the costs associated with end of term lease repairs can often accumulate and be huge. Also, people often assume that taking on a dilapidated
building under a lease means that they simply hand it back in the same or similar condition. This is not normally the case, and thus why a Pre-Lease Survey
is fundamental. A Schedule of Condition can often help limit future repairing liabilities.
ALTERATIONS AND REINSTATEMENT
Just think of all that money you have spent on your leased property? Putting in your meeting rooms, changing the layout, and of course repositioning
lights, and air conditioning to suit. This is all great for your organisation, but, often what you require is not the same as the next tenant. Any alterations
you carry out to your leased property may have to be stripped out, and any damage be made good. Removing your bespoke cellular office could damage
the ceiling and carpets, and you may end up with a much larger reinstatement bill than you anticipated.
DECORATIONS
Yes -a pretty standard clause. You must decorate your premises at the end of the lease. Actually, most leases state that decorations should be carried out
within the last 12 months of the lease. If this is the case, then don’t give your premises a lick of paint 13 months from the lease expiry date – if you do, you
will end up having to do it all again within the final 12 months! Also, if you are taking on a lease of an industrial property, bear in mind that decoration may
include not only floors and walls but also any painted steel frame, which in larger premises, can be quite an expense.
LANDLORD RIGHT TO RE-ENTER & JERVIS V HARRIS CLAUSE
If your lease has a clause that allows your Landlord to enter your building, inspect, and then serve a schedule of repairs upon you, be careful. An explicit
clause like this, giving the Landlord the right to serve a repairs notice, can be hard to defend against. Also, whereas repairs at the end of the lease can
sometimes be countered with Valuation advice arguments, these do not apply during the lease term under what is often known as a ‘Jervis v Harris’ clause.
BREAK CLAUSE
Your lease may contain a Break Clause, giving you the option to exit your lease early. These can very helpful and give you some flexibility in your business,
so if your needs change, you can terminate early and seek new accommodation elsewhere. Or can you? Be very careful when agreeing on the wording
of Break Clauses. Have your legal advisors scrutinise the lease very carefully. You need to ensure the Break Clause is not conditional, for example, upon
every last repair to the property having been completed. One minor error here could leave you on the hook for the rest of your lease term, which could be
very damaging for your business.
STATUTORY REQUIREMENTS
Your lease will most likely have a section that imposes an obligation for your to comply with statutory requirements. Are your fire alarms and emergency
lights all up to date? Do you have your asbestos survey and management plan? Do your alterations comply with legal requirements and do you have, for
example, Building Regulations Approval or Planning Consent. Do you occupy a Listed Building? If so, have you carried out anything without Listed Building
Consent? Perhaps the alterations you have in mind that you consider essential for the running of your business may not be permissible if your property is
Listed? All very important matters you should consider.

DURING
Once you have ‘signed on the dotted line’ and have
made a commitment to your new lease and Landlord, it
is necessary to plan ahead to ensure that the building
performs satisfactorily for future years.
This is to ensure uninterrupted business downtime for your organisation, and, to protect the building asset
value for your Landlord. By doing this, you will reduce your potential business disruption losses, prevent
smaller value items of disrepair manifesting into more expensive, serious problems, and reduce your end
of lease term dilapidation liability.
Without planning for repairs in advance, problems will arise. What often happens is that people tackle
maintenance on a reactive basis, which is often an expensive way to deal with remedial works. All too
often, people fail to prevent problems prior to them occurring, which can often result in downtime to a
business operation and loss of productivity.
A “planned maintenance schedule” is a working document we can prepare to allow you to budget for a
phased implementation of repairs and redecoration throughout you lease term. By keeping on top of your
maintenance, little problems do not become big problems, and, by the end of your lease, your building
should be in a condition that complies largely with the terms of your lease. This reduces the amount of
repairs your Landlord can ask you to undertake, thus reducing your dilapidations liability.
Also, if you do the works yourself, during the lease, you can control the nature of the works and who carries
out those works, you retain control over tenders, and can possibly recover VAT on the cost of works. This
can be a much better way than doing nothing and thus allowing the Landlord to implement repairs and
then recover costs from you by way of a claim of damages after the lease has ended.
Finally, by maintaining your business premises, you maintain the appearance of your property which
reflects well on your business. There is nothing worse than when a customer visits your premises to find
it in a poor condition – the lack of maintenance can raise questions about your business standing in your
customers minds.
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ALTERATIONS
If you are planning alterations to suit your occupational needs,
we can advise upon the impact your alterations may have upon
your future reinstatement obligations and associated potential
damage, and, we can help you prepare documentation necessary
to gain Landlords Consent by way of a formal Licence for
Alterations.
We can measure, draw, design, specify, tender and administer
any contractual building works you may have in mind for you, so
you can concentrate on the important stuff – the running of your
business.
Of course, you will also need legal advice here too, to ensure your
licence for alterations is drafted in a manner that benefits you,
and hence having your legal advisor involved when considering
any alterations is vitally important.

APPROACHING LEASE END
The issue of dilapidations can be a very fraught and expensive area
connected with properties held on leases. If handled incorrectly they
can often cost parties a considerable amount of money.
If you are a tenant, ensure you consider your dilapidation liabilities early. Costs of
dilapidation repairs, decoration and reinstatement works can be a considerable
expense to any organisation. If not carried out before the end of a lease, the landlord
is often entitled to recover further substantial monies from you, for items such as
professional fees, loss of rent and VAT, all of which could have been reduced or even
avoided if, as a tenant, you had carried out the works yourselves.
By having a “Dilapidation Assessment” report prepared before your lease ends, you
can establish the likely costs involved early on, to enable you to develop a budget
and strategy for either carrying out works or reaching a negotiated cash settlement
with your landlord.
Again, planning your exit, coupled with discussions with your legal advisors, will allow
you to consider exit costs, strategy and potentially help you with either relocation
options, or, assist you with re-negotiation of your lease, to help yiou get the best
possible terms for your organisation.
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LEASE END
You may be one of the unfortunate businesses that has had a Schedule
of Dilapidations served upon you. This could be approaching the end of
your lease, or, even shortly after you have vacated.
This document will be a list of all the alleged breaches of your lease
obligations, and, will often be costed by the Landlords Surveyor. The
claim for damages will cover the cost of putting the property into the
required state of repair and decoration as required by your lease.
The claim may also ask that you remove all those lovely alterations you
carried out to the property to make it suitable for your occupation.
If you receive a “Shedule of Dilapidations”, you need to take professional
advice, both from a firm of Chartered Surveyors, like ourselves, and also, legal
advice to ensure that the schedule has been served legally, and all is in order
in that regard.
We can help by reviewing your lease and checking whether the claim served
upon you is firstly in accordance with the lease obligations, and secondly, that
the proposed ‘breaches’ and ‘remedies’ are reasonable and not over onerous
or exaggerated. We can seek to try and reduce any claim, and, negotiate a
settlement for you.

THE PROCESS
D
Discover Risks
I
In Occupation Maintenance Considerations
L
Licence for Alterations
A
Assessment for Exit
P
Pro-Active Case Management
S
Settlement

CONTACT SMITH MARSTON
NEWCASTLE
Rotterdam House
116 Quayside
Newcastle upon Tyne
NE1 3DY
Tel: 0191 2603123
MANCHESTER
Rotterdam House
116 Quayside
Newcastle upon Tyne
NE1 3DY
Tel: 0191 2603123
NOTTINGHAM
6th Floor
City Gate East
Toll House Hill
Nottingham
NG1 5FS
Tel: 0115 8960458
info@smithmarston.co.uk