Dilapidations and Covid-19

Dilapidations and Covid-19

There is nothing in the Coronavirus Act 2020 or in the government guidance which prevents landlords pursuing a terminal dilapidations claim against a tenant in respect of outstanding breaches of covenant when a lease comes to an end.

Tenants should still seek to ensure that they hand the premises back in accordance with the yielding up covenants in their lease - commonly this will be in repair, decorated and with tenant’s alterations removed. It is also common for a tenant to be required to hand back the premises with vacant possession, even where this is not a condition of terminating the lease.

Tenants will therefore need to consider carefully what works will be required to comply with their yielding up covenant, and whether it is in fact possible to carry out these works where premises are closed or contractors will struggle to comply with social distancing guidelines and/or obtain materials.

Whether the COVID-19 restrictions provide any grounds to argue that these works do not need to be done will depend on the wording of the individual lease, but in many cases the tenant may still be liable even if their practical ability to complete the works has been materially affected by the restrictions.

Conversely, a landlord’s ability to claim for loss of rent during the period while works are done may be affected if the COVID-19 restrictions mean that the premises could not practically be re-let in any event.

The COVID-19 restrictions are affecting many aspects of landlord and tenant relationships. Landlords and tenants should seek advice on the potential impact of COVID-19 on their position with respect to dilapidations claims to ensure that, where appropriate, they are taking advantage of or mitigating this impact.