by Richard Metcalfe, of Metcalfe Stanley

Everyone who leases commercial property large or small, old or new, must understand this basic fact: Unless you take appropriate steps before signing the lease, you will be responsible for repairing the property before you leave, regardless of its condition when you first occupy it.

Many leaseholders do not understand this and are faced with substantial and unwelcome costs at the end of their lease.

For example, a 30,000 sq ft warehouse which was weathertight at the start of a 15-year lease may require a new roof at the end of the lease at a cost of £140,000. In the vast majority of cases this is the responsibility of the outgoing leaseholder who must either arrange for the work to be done or pay the landlord a sum of money in compensation.

Getting the work done inevitably is disruptive to the leaseholder's business and means he must vacate the building early. Negotiating a financial sum with the landlord is full of uncertainty and can involve substantial legal costs.

Chartered building surveyors are experienced in working with legal advisors to negotiate the pitfalls of this area of the law, ensuring that their clients, be they landlords or leaseholders, respectively maximise their gains or minimise their losses when buildings are being vacated.

Many clients believe that because they are leasing a building they do not really need a building survey as they would if they were purchasing a freehold property.

This is a dangerous misconception as it is vital before signing any commercial lease to obtain proper professional advice in order to understand and quantify the liabilities which your organisation is taking on. In this way the cost effectiveness of the lease can be assessed at the outset and contingencies made so that there are no unexpected exit costs at the end of the lease.

If you are a landlord, as a lease comes towards its end always take appropriate legal advice and also advice from a chartered building surveyor at an early stage. You should have your Schedule of Dilapidations prepared and served on the lessee in good time and in sufficient detail by an experienced chartered building surveyor practitioner.

If you are the prospective leaseholder consult your chartered building surveyor before you sign the lease and then again in the last year of the lease to plan your exit strategy in the most efficient way; do not wait until you receive a Schedule of Dilapidations from your landlord.

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