Dilapidations Covenants: A Landlord’s Guide

22nd February 2024

Covenants in property leases are legal promises or obligations that both the landlord and the tenant agree to comply with during the lease term.  

The term ‘dilapidations’ refers to items of disrepair that are covered by the repair and decoration covenants contained in a lease. The term is often used to refer to any breaches of the tenant’s covenants in a lease which relate to the physical state and condition of the let premises at the end of the lease term.  

If you are a landlord, understanding the repair provisions in a lease is crucial in protecting your property and ensuring its value over time.  

Types of Dilapidations Covenants 

There are four principal dilapidation covenants commonly contained in property leases:  

  • Repairing Covenants: These commonly require the tenant to keep the property in good repair and condition. Sometimes the tenants’ repair obligation can be limited to the condition the property was in at the date of the lease. This is evidenced by a photographic schedule of condition which is annexed to the document.  
  • Decorating Covenants: These obligate the tenant to decorate the property on the dates agreed. Such covenants should define the extent and frequency of decoration to maintain property standards.  
  • Reinstatement Covenants: These covenants place an obligation on the tenant to remove any alterations at the end of the lease term and restore the property to its original state and condition when they vacate. However, this is dependent on the landlord’s preferences. The lease should also clearly state what property alterations are prohibited, what alterations require the permission of the landlord and how the reinstatement of the property should be carried out.  
  • Statutory Compliance Covenants: These covenants ensure the tenant adheres to all relevant laws and regulations in connection with their occupation and use of the property.   

How to Negotiate Covenants 

Negotiating covenants within property leases requires a delicate balance.  

As a landlord, you must protect your property while taking into consideration your tenant’s needs.  

As such, flexibility is essential, allowing tenants to make necessary alterations without compromising your property’s integrity.  

Fairness plays a pivotal role, ensuring that the interests of both parties are respected during negotiations.  

This also fosters trust and respect, laying the foundation for a positive landlord-tenant relationship. 

In any negotiations, you need to ensure that lease agreements remain in line with current property standards, market conditions, and legislation.  

Ultimately your goal should be to maintain a cooperative environment and a strong landlord-tenant relationship built on clear communication, responsiveness, and fairness but also with a strict adherence to compliance. 

Your Role in Enforcing Covenants 

One of your key responsibilities, as a landlord, is ensuring that tenants adhere to the dilapidation and repair covenants in the lease.  

This enforcement often begins with monitoring and inspection. Regular property inspections assist landlords in confirming that the tenants are maintaining the property as per the agreed terms. The lease should set out when and on what basis the landlord is permitted to enter the property to inspect its repair and condition. As a landlord, you are providing a covenant in the lease to allow the tenant quiet enjoyment of the property. Therefore, you must consider this when exercising any rights of access to inspect the property.  

Inspections can help identify issues early, preventing them from escalating into more significant problems that could lead to disputes or costly repairs later. 

By staying proactive with inspections, landlords can ensure that their property remains in the agreed-upon condition, thereby safeguarding their investment. Communication plays a pivotal role in this.  

Clear, consistent, and transparent communication with tenants is crucial and helps to avoid later disputes with the tenant.  

However, where there is a breach of the covenants, landlords must be prepared to take legal action as a last resort.  

The landlord’s right to enforce the tenants’ covenants through legal means, when necessary, helps send a clear message about the seriousness of the covenants being provided and the commitment that is needed to maintain the property’s condition.  

Please speak to our team if you have any queries regarding the dilapidation covenants contained within your lease or if you think the covenants may have been breached.