The end of a commercial lease can be expensive if dilapidations are left until the last minute.

Repairs, reinstatement works, decoration and other lease obligations can all become part of a landlord’s claim when a tenant vacates a property. In some cases, the costs can be significant, particularly where a business has occupied the premises for a long time or made substantial alterations.

For tenants, the best way to reduce uncertainty is to understand potential liabilities early and plan accordingly.

Here are seven of the most common mistakes businesses make when approaching the end of a commercial lease.

1. Waiting Until the Landlord Serves a Schedule

One of the biggest mistakes tenants make is assuming dilapidations only become an issue once the landlord issues a formal schedule.

By that point, there may be limited time to investigate the claim, obtain contractor prices or complete remedial works before the lease expires.

Arranging advice from experienced dilapidation surveyors several months before the end of the lease can give a tenant a clearer understanding of potential liabilities while there is still time to act.

An early inspection may identify repairs, decoration or reinstatement work that could be dealt with before the property is handed back.

2. Assuming Every Defect Is the Tenant’s Responsibility

A commercial property may have defects, but that does not automatically mean the tenant is responsible for every one of them.

Liability depends heavily on the wording of the lease.

Repairing obligations can vary significantly between leases, and factors such as the original condition of the property may also be relevant.

This is why a dilapidation assessment should not simply be treated as a list of defects.

The property’s condition needs to be considered alongside the tenant’s contractual obligations.

3. Forgetting About Alterations

Commercial tenants frequently alter premises to suit their business.

Typical changes include:

• Internal partitions
• Flooring
• Lighting
• Signage
• Cabling
• Kitchen facilities
• Specialist equipment
• Storage systems

These alterations may have been permitted during the tenancy, but the lease or licence for alterations may still require them to be removed when the tenant leaves.

Reinstatement costs can become a significant part of a dilapidations claim, particularly where substantial fit-out works have taken place.

Tenants should therefore review alterations well before lease expiry and establish which ones may need to be removed.

4. Leaving Repairs Until the Final Weeks

Some repairs can be relatively straightforward when identified early.

Left until the end of a lease, however, tenants may find themselves trying to organise contractors at short notice while simultaneously relocating their business.

This can result in rushed decisions and reduced control over costs.

An earlier inspection gives businesses time to obtain quotations, programme works and decide which repairs they want to undertake themselves.

It can also help identify problems that may become more expensive if they continue to deteriorate.

5. Overlooking Redecoration Obligations

Redecoration is a common feature of commercial leases.

Some leases require tenants to redecorate at set intervals and again towards the end of the tenancy.

It can easily be overlooked where the property appears to be in generally reasonable condition.

However, if the lease contains a specific redecoration obligation, the landlord may still raise it as part of a dilapidations claim.

Reviewing these clauses early helps tenants understand exactly what is expected before the property is returned.

6. Failing to Check the Original Schedule of Condition

Where a schedule of condition was prepared at the beginning of the lease, it can be an important document when assessing potential liabilities.

A schedule of condition records the state of the property at the start of the tenancy, usually using photographs and written descriptions.

Depending on the lease wording, this may restrict the tenant’s obligation to putting the premises into any better condition than was originally recorded.

Businesses should therefore locate any schedule of condition well before lease expiry and make sure it is considered alongside the current condition of the property.

Without it, disagreements may arise about whether particular defects existed before the tenant moved in.

7. Treating Dilapidations as a Final-Day Problem

Perhaps the biggest mistake is treating dilapidations as something to deal with after the business has already moved out.

In reality, lease-end liabilities are better treated as part of the wider relocation or exit strategy.

Businesses approaching lease expiry are often already considering:

• New premises
• Removal costs
• IT relocation
• Fit-out expenditure
• Staff logistics
• Business interruption

Potential dilapidation costs should be included in that planning too.

Knowing the likely position early makes it much easier to budget and decide whether completing works before leaving is worthwhile.

What Can a Dilapidation Survey Identify?

A survey will usually consider the areas of the property that may fall within the tenant’s lease obligations.

Depending on the building and lease, this could include:

• Internal and external repairs
• Decorative condition
• Floors, walls and ceilings
• Roofs and external elements
• Windows and doors
• Mechanical and electrical installations
• Tenant alterations
• Reinstatement requirements
• Cleaning and clearance
• General maintenance issues

The aim is to identify potential breaches before they become part of a larger dispute.

For landlords, a similar inspection can help establish the condition of the premises and prepare for the end of a tenancy.

Should Tenants Carry Out the Work Themselves?

In some situations, tenants may decide to complete repair or reinstatement works before leaving.

This can provide greater control over the contractors used and the cost of the work.

However, it is important to understand exactly what the lease requires before committing to significant expenditure.

Completing unnecessary work can be just as unhelpful as failing to address genuine liabilities.

Professional advice can therefore help businesses prioritise the work that actually matters.

Planning Ahead

Dilapidations can become a major issue when they are discovered too late.

Tenants who start planning several months before lease expiry generally have more options available to them.

They can inspect the property, review the lease, assess alterations, obtain contractor quotations and make informed decisions about which works to complete.

Landlords also benefit from early planning, particularly where they intend to re-let the building quickly after the existing tenant leaves.

Ultimately, the earlier both parties understand the condition of the property and the relevant lease obligations, the easier it is to manage the process.

For commercial tenants in particular, treating dilapidations as part of lease-exit planning rather than a last-minute problem can significantly reduce uncertainty and help avoid unnecessary cost.