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When disruption hits the market, do you re-assess your property valuation assumptions?

In 2008, when the financial crash hit, tenants whose leases were coming to an end were mostly comfortable in the knowledge that their landlords were due to redevelop or refurbish the premises. This would largely eliminate their dilapidations liability. But following the crash, those sensible assumptions became wrong assumptions.

Likewise, Covid-19 rocked the market in a manner which is still being reckoned with. When the lockdowns came into effect, our advice was to plan for the worst and hope for the best. Planning for the worst might well mean tenants reconsidering those assumptions about their landlords’ redevelopment plans and updating their strategy.

Perhaps tenants should budget for a greater liability, now assuming that their landlord might well want the premises returned reinstated, repaired and decorated, so that the property is available immediately for new tenants to occupy.

If tenants’ premises are vacant due to home working, or if home working policies mean that premises can be made available for contractors to complete dilapidations works then perhaps that should be considered again by tenants nearing the end of their tenancies.

Current circumstances may lead to disputes about these sorts of issues. Supersession and valuation matters are complicated and expensive to argue at the best of times, so we hope all parties in this situation are able to come to an amicable solution.

For those who need guidance and support in working through these matters, please get in touch!

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