Dilapidation Claims and Physical Yieldback Obligations in Industrial Leases
Proactive floor slab core-drilling, envelope maintenance, and Section 18 valuation caps reduce industrial lease dilapidations settlements by up to sixty percent.
Loss of Rent Damages
Meaning
Financial compensation claimed for the period during which a property cannot be re-let due to outstanding repairs or unfulfilled obligations. Loss of rent damages are sought by a landlord when a tenant’s failure to reinstate the building at the end of the lease prevents a new tenant from moving in. The claim covers the rent that would have been earned during the repair period.
Revenue Replacement
Calculation of the amount is based on the time it takes to complete the necessary works. Loss of rent damages are not automatic and require the landlord to prove that a specific letting was lost because of the condition of the site. If there is no demand for the property in the market, the claim for these damages may fail.
This creates a high burden of proof for the claimant.
Mitigation Evidence
Landlords must show they took reasonable steps to find a new occupant. Loss of rent damages are reduced if the landlord delayed the start of the repairs or the marketing of the property. The tenant can challenge the length of the repair schedule to lower the financial impact.
Damage Quantification
Amount of the claim includes the base rent and sometimes the service charge. Loss of rent damages represent a significant risk. They increase the total settlement cost.