We were instructed by a landlord company in relation to a terminal dilapidations claim valued at £3,500,000.
The tenant had been in occupation of two properties for over 15 years but failed to return them in compliance with the repair covenants when the leases came to an end.
The landlords instructed a firm of building surveyors to inspect the premises after the lease ended and they prepared a terminal schedule of dilapidations. The properties were found to be in poor condition, and there were significant defects in breaches of the terms of the leases.
The tenant company undertook a series of works to strip out their chattels and fixtures before the end of the leases but failed to undertake a scheme of works allowing the properties to be given back in repair.
After the lease had expired and the tenant had vacated, the landlord's building surveyor was instructed to prepare a specification of works to return the properties to a lettable standard in accordance with the lease terms.
The landlord's building surveyors recorded the condition of the properties photographically, with over 13,000 photos being taken, which were shared with the tenant's building surveyors. The landlord undertook significant works to the property to restore it to the state and condition the tenant had been obliged to return it to the landlord and subsequently court proceedings were issued against the former tenant claiming the cost of those works and other damages.
The claim was highly disputed by the former tenant who relied on a section 18 valuation defence, namely that despite the landlord having incurred the cost of the repair works, the landlord was not entitled to recover more than the value of the diminution to its reversionary interest.
This argument was raised despite the fact that the landlord had carried out the works and incurred the repair costs.
The landlord also instructed a specialist section 18 valuer who attended the mediation at which the claim was able to be settled for £1,500,000.
