Dilapidations, Lease Risk and Protecting Value in Commercial Property by Tim Clarke

Speaker 2: 00:08
Hello and welcome. You’re listening to This Is Surveying, the podcast shining a light on the people, ideas, and stories shaping this incredible profession. I’m Nina Young, founder of Surveyors UK and the Surveying Room, the community bringing surveys together, breaking down silos, and making surveying visible. So for now, let’s dive into our latest episode.

Speaker 3: 00:35
Hello everybody, and welcome to This is Surveying. I’m your host, Nina Young, and today’s guest is Tim Clark. So welcome, Tim.

Speaker 1: 00:45
Thanks very much, Nina. Very nice to be here with you.

Speaker 3: 00:48
It’s very good to have you on here today, Tim. So Tim Clark is the managing director of Harrison Clark, which is an established chart surveying firm. An interesting discussion because Tim’s going to be talking about dilapidations. So I think it’s going to be an interesting topic for a lot of our listeners. But I think, as always, when we first start, I’d like to learn a bit more, and I’m sure the listeners would, a bit more about Tim. So tell us a little bit about yourself, Tim, and how you became a building surveyor, which I believe you are.

Speaker 1: 01:21
Well, thanks very much, Nina. So just the same as any other building surveyor, I don’t think I ever planned to become a building surveyor. So I just kind of just left college, made the decision. I didn’t really fancy going to university, and I just kind of see what happened. My dad worked for Estate Management and Building Service at the University of Cambridge. So he’s in charge of finances for a very big department. I think they had about 300 buildings to oversee, some of them very historic. And they had a they had an opening coming up for a training building surveyor. No dad, I’m not going to do that. Sounds really boring. So I went along for a kind of lucky life day with let’s call him the fun surveyor. And we just basically went and had a lovely time going touring the estate, drinking cups of coffee, having nice chats. I thought, well, I reckon I could do this. So I’d only planned to stay in Cambridge for maybe like three months or so, but I did get the job and I was up there for five and a half years. So the University of Cambridge very kindly sponsored me through my building surveying undergraduate degree. So that was a five-year degree. And then when I had finally finished that, I wanted to relocate back to Southampton, which is kind of where my social life had stayed during that whole five and a half years. That was a lot of driving up and down. Then I managed to get into private practice, which was perhaps a bit of a shock going from public sector to private practice, where they kind of made work a little bit harder, or certainly in my instance, found myself at a construction consultancy called Rund Partnership, who I think were about five times the size that they uh they were when I moved down there in 2011. So they’re doing very well. Then they started to talk about some redundancy. So I at that point I moved over to a regional agency. So they were the firm was primarily residential agency, but they had a commercial one. And that’s where I made the transition from being a construction consultant to working in property. So as a building surveyor, there’s kind of two fairly distinct sides of what we do. We do the kind of the nuts of bolts, how to put the building together, how to repair it. And then the property side is how we can help people build deals, how we can de-risk those deals for them. And probably for the first time in my career, I actually started enjoying building surveillance. Um, I’d always found with the construction side, there was always somebody that had been in the industry for longer, always thought they knew better, and it was just a bit of a grind to try to get the message through there. You might want to put scaffold up rather than doing all of this off a ladder. And Barry, just because he’s been doing it off a ladder for your 30-year career and haven’t yet fallen off, it doesn’t make it the safest way. But there we go. So something in property people start listening to you, which is which is really good. And then I used that job as a springboard to get into CBRE, who had some really interesting clients. So we were dealing with big sheds for nice pension fund clients who really knew what they were doing. And it’s probably at CBRE that I really owned the dilapidations piece, just because they’re most of their clients are really structured and set up. They understood, they understood what dilapidations was, but also importantly, why it’s important. And then, yeah, some time ago now, back in 2017, I left CBRE. I didn’t really have a direction for the business, but I thought I probably don’t want to be spending the next 30 years working by myself at my study. And so when the word loaded release, I was lucky enough to be able to take some people on, including Faye Williams, my other director, who everyone seems to get along very well with. Um and yeah, now we’re a team of a team of eight, but I think we’ll be back up to 10 in a couple of months’ time. So that’s cool.

Speaker 3: 05:00
So you’re quite sizable then because the that’s uh I think when you get to the that kind of size 10, when I look at all the the firms that there are in the UK, that’s that’s you know, because a lot of them are maybe more two, three up to five. I think ten, that’s uh quite sizable. How do you find like managing managing a firm?

Speaker 1: 05:19
Well, a lot of people said by the time we get to 10 in your business, that’s when you start getting the HR issues. We’re like, no, no, no, we’ve got such an amazingly positive, wonderful company culture, we’ve got fantastic colleagues, that’s never going to happen to us. And we we have had 10 people before, and yeah, it is true. You do start to get some noodles, but I think we we’ve kind of ironed ironed those out. But you know, naturally, with this many people, as nice as we we are to each other, just sometimes things happen and you’ve just got you’ve got to deal with it. So, yeah, I mean, on the whole, very, very positive. But they can’t they can be kind of just yeah, I can imagine.

Speaker 3: 05:56
I can imagine. Yeah. On the topic that obviously we’re going to be discussing dilapidations, it will be helpful to me, but also to a lot of listeners, because we we have quite a lot of students, for example. I’m surveyors, not in this space. Just can you just give us a sort of a bit of an explanation or in your words, what dilapidations actually what is it? What is dilapidations?

Speaker 1: 06:21
Yeah, exactly. So interestingly, a couple of years ago we ran an RICS Matrix Online presentation. It was one of the best attendant ones. I was really, really pleased to be able to deliver the message to so many RICS student surveyors. So basically, when you enter into a commercial lease, it’s not the same as taking out on a residential tenancy. So in a residential tenancy, you typically have a fair, wear, and tear clause in there. So over time, you know, things do start to become a little bit shabbier in a commercial lease. You don’t tend to get fair, wear and tear clauses. So at least end landlords will send in their surveyor to uh see in how many ways the tenant has possibly breached their lease. And you know, some surveyors are imaginative on that basis, and so at the end of a lease, a commercial tenant can expect the schedule of dilapidations to uh come through their letterbox or maybe through their emails, and sometimes these sums are eye-watering. So you might, for example, be occupying a relatively small warehouse or a relatively small office, and it’s not unusual to see dilapidations claims of £100,000 or more. So it’s really important. Okay, so let me backtrack a little bit. Why do landlords do this? They do it to maintain the value of their real estate. So if they buy a million pound building, they want it to stay worth a million pounds. If they had a tenant that didn’t really look after the building and it’s really shabby and they couldn’t attract the same rental value after that tenant had been in, then the value of the landlord’s property would go down. And after several subsequent leases, it would continue to go down. So the landlords are really keen to protect their position by saying that to be fair, before you went into this property, you did promise that you were going to paint all the walls when you left and you haven’t done so. So it’s it’s a really good mechanism for that. Now, one of the misunderstandings with dilapidations is that it’s all about the schedule of dilapidations, which is true to a degree. But to my mind, the schedule of dilapidations is just a list of the technical breaches of the lease. And it’s not true that a breach of the lease will automatically lead to loss for the landlord. So, although they might have a £100,000 claim, that’s very much just a starting point. And it’d be really, really rare for a tenant to roll over and go, oh yeah, okay, fair enough, here’s £100,000. So it’s really important that surveyors that know what they’re doing get involved and run through each individual item on that shape of dilapidations to ascertain whether or not the landlord has actually suffered a loss, or whether it’s something that, yeah, well, it’s technical breach, it doesn’t really matter so much. And that’s how dilapidations tend to get negotiated.

Speaker 3: 08:60
Oh, I see. So that’s only just the start. So then you’ve got just going back though, before what is the trigger for the schedule? What is typically the trigger? Is it the least renewal or you know?

Speaker 1: 09:11
Well, yeah, you’re right. So there are a few different ways that that could be triggered. So the classic way is the landlord goes, Oh, I’ll just remember my tenant’s leaving next month. Let’s get a schedule for dilapidations for all that. And so they get in contact with the the surveyor and go, Oh, we need this really quick. And so typically it’s just before a tenant leaves or just after. But in reality, a better sign to do that is, you know, if you’ve got a five-year lease, maybe you look at it three, four, six months before lease end. Because some leases have reinstatement clauses that require the landlord to give the tenant a specific amount of notice if they want alterations to be removed, for example. So sometimes if we’re approached too late towards the end of the lease, the landlord can lose their right to reinstate the property. And so they then have to deal with the burden of spending thousands of pounds removing, say, tenants’ partitions that they don’t want and making the property good. And if those end up in the schedule of dilapidations, the tenant quite rightly will turn around and go, Well, you didn’t give me the notice that it says on the lease, so I’m not going to pay you for that. Okay. So longer leases, you you might be looking at doing the schedule two years, three years before leasing. So that would be particularly the case for you know a distribution warehouse on a 20-year lease. And that gives the tenant the opportunity to complete the necessary work themselves, which is great for the tenant often because they can claim to be AT back, they can control the cost of things, they can control the program. But you know, not every tenant wants to do the work. And we find that a lot of, let’s say, professional tenants, so ones that have got loads and loads and loads of lease held property, most of them don’t end up doing the the works themselves. They would rather negotiate a financial settlement.

Speaker 3: 10:55
So okay, so they don’t want the hassle because it’s disruptive to them anyway, isn’t it? So they just wait until and then they settle on that, and so then the landlord has to sort it out.

Speaker 1: 11:04
Yeah, that’s exactly. And the one kind of occupier of that nature that really springs to mind, I’ve done a lot of work for them in the past, is banks. And quite often you’ll see published in the newspaper, oh, Bloyd, Matt West, ASBC, are planning another hundred bank closures. And the reason that they in particular don’t want to do the work is that once a bank’s left a property, it’s really unlikely that another bank’s going to go in. So a lot of the time those properties are going to be redeveloped, and so the dilapidations claim will be superseded. So that’s from the Landlord and Tenant Act 1927, section 81. That’s probably the main bit of um dilapidations legislation. And they know that it’s going to be cheaper for them overall if they don’t do anything other than strip out their sensitive equipment.

Speaker 3: 11:48
Is there ever a point where the actual tenant will ask a surveyor to come in to say, are we compliant? You know, where where are we at? So give them a heads up. Does it ever work that way around?

Speaker 1: 12:01
Yeah, it absolutely does. So this is normally the case when maybe a tenant is planning a few branch closures. So they’re kind of phasing them. They feel like they’ve really been burned by the first one, and then the CEO or the FD will go, No, we really need to take some advice to make sure that we are in the best position for leaving this premise. And I’ve got a couple of clients like that. It’s always reassuring when they they come to get their own advice because, of course, the landlord surveyor is looking at the same document as the tenant surveillance, and it just means that they can ease their way out, they can plan their finances, they can potentially save some corporation tax if they report on it through FRS or 102 properly. So there are a lot of benefits, but a lot of the time businesses don’t have regular lease ends, and so memories disappear quite quickly about how badly they got burned last time. They thought, okay, all right, let’s done.

Speaker 3: 12:59
And would have been right in assuming that you can’t act for both parties?

Speaker 1: 13:03
Uh no, you can’t act for both parties. Uh well, I guess you probably could if you could get an agreement. It’s just really, really rare. And there is talk about being able to get single surveyor dilapidations appointments in a similar way to um party war ones. And actually, that was touched on briefly at the RSS Dilapidations Conference, which was held last week, but it was kind of fairly quickly glossed over and the conversation moved on. So I don’t think there’s a major appetite to get too involved in that. And one of the key reasons is that if you’re one surveyor representing both sides, it could be that neither side is happy with the decision you’re you’re making. And so potentially you’ve got two claims coming your way rather than one. And I think you know, surveyors are generally quite risk-averse, and they’d probably rather not really be in that situation.

Speaker 3: 13:53
Well, that’s really, really helpful, Tim, because I I’ve learned, I feel I’ve learned a lot in that short space of time around dilapidations. One of the questions I’m curious about is obviously you’re going to go into this property and you are looking for like a lot of surveys in different areas, residential, you’re you’re looking for issues, you know, non-compliance, etc. And with the delapse, excuse my terminology, I’m not used to this area. But do you have many situations? I mean, I could imagine this there’s possibly hostility sometimes. Do you have situations where people are quite obtrusive or things are hidden? Because I, you know, I hear this on the other side in the residential space. I’m just curious about commercial and leases and and things like that.

Speaker 1: 14:41
No, I don’t I don’t think so, not so much. I mean, I it it I do definitely understand where you’re coming from, but typically if a company is leasing space, they’ve got employees, and it may not be the main shareholder you’re meeting on site, it may just be that you’re meeting the the office manager, and so they don’t really have so much skin in the game. So, with kind of larger organizations, if you’re meeting um you know just somebody that works in the office, they can go the other way around and go, Oh, do you know, this bit’s been bothering me for years. We’ve got a leak over here, and you know, this bit of air conditioning doesn’t work, and it’s all horrendous, and that’s that’s bad, and that’s bad. But I think on the whole, if you do meet the business owner, they kind of understand what’s going on and they’re in there accepting that you know the landlord does have a right to send their surveyor in. And ultimately, like I said at the beginning, the schedule of dilapidations isn’t the claim that comes afterwards with the negotiation. So I think most people are aware there’s negotiation. The other situation that sometimes we have uh that can be quite sensitive is if the employees don’t know that the business is being wound up or that particular office is being closed. So a lot of the time we’re asked to make up a cover story and say, Well, we we can’t tell you tell our employees that you’re the landlord surveyor. It’s like, okay, that’s all right. We’re just completing an inspection from the insurance company. That’s never been a problem before. But now I’ve said it on your podcast, then your millions of listeners may suddenly get a little suspicious.

Speaker 3: 16:12
Millions of listeners. Thank you very much. Yeah, I’m fighting them up. These listeners. Yeah, right. One of the things before we started the recording, we were discussing dilapidations. One of the things you mentioned was about how landlords can prepare for a claim. Do you want to sort of discuss a bit more around that?

Speaker 1: 16:36
Yeah, absolutely. So landlords, just like humans, come in all sorts of shapes and sizes. So, you know, we because we are a relatively small firm, we tend to deal with landlords that are relatively small. So when we’re um, when I was working for CBRE, we had all pension funds that owned millions, billions of pounds of property, and they they kind of really understood that in order to maximize their the valuation of their real estate, they needed to maintain it. And so if a if a tenant exit the building, they would then have to go and do the actual works. Now, what I find with some smaller landlords who may have bought commercial property in a sick, for example, they’ve done quite well out of their own business. They might just have one, two, or three commercial premises. They want a hassle-free property ownership ride. And so we’ll go into this and we’ll say, right, here’s the purpose of dilapidations. We’ll produce a schedule of dilapidations. It will be difficult for us to evidence your loss unless you’re planning on going and doing the actual work. And that’s going to help us maximize the recovery. So we can talk them through everything that we need to get in place to make sure that they get nice dilapidations payouts so that they can go and do the works required to maintain the value of their real estate. But what we find is that one of two things happens is sometimes they they just want the money. So, well, oh yeah, I just want to pay out. I’m going to pocket that, these are to go on holiday, buy a new car, something like that. It’s like, okay, fine, but that’s going to make it harder to prove your loss. And the other thing is that sometimes they just don’t want to do any of that and they go, Oh, just try your best. And so, again, that they’ll pocket the money, but in some of those cases, we say, Well, if you just tell us to do our best, we have told you all of the risks. And by doing nothing, you do risk not getting anything out of the tenant, still having a shabby property, and it does happen. So, you know, three, six months down the line, they’ll give us up the call and go, Well, what’s happening with the deluxe? It’s like, well, as we said, the tenant has resisted everything on the basis that you’ve done nothing and you’ve relent the property to somebody else. So, yeah, it as much as we can, as surveyors, it’s it’s our job to brief landlords on how to maximize their chance of recovery. If the landlords then say, I’m not going to do any of that, then we can only work with what we’ve got.

Speaker 3: 18:58
That’s it. So they have to, do they actually have to commit to doing the repairs or the work? And then they have to evidence that or that has to be documented.

Speaker 1: 19:08
They don’t have to, it all gets quite complicated. So with dilapations, we deal with case law d going back to 1860s is come with the some of the kind of widely known case law. So over the years, what’s that 160 years, there have been many kind of niggly little cases that have drawn the course that way or a little bit that way. And so you don’t have to do the work to be able to demonstrate the loss, but it does make it a lot easier to demonstrate the loss if you do the work. So the thing that most people want to avoid in most areas of life, not just dilapidations, is people don’t want to go to court. So normally the discussion between the surveyors is a run-through of how the court would approach it. So we can come up with bits of case law and say, no, you do owe my client that money because of this bit of case law over there. And then the other side of the surveyor will go, well, no, because of this bit of case law, we absolutely don’t. So we’re always already trying to run through that process. But ultimately, you know, surveyors aren’t lawyers. A lot of dilapidation surveyors don’t get too ingrained in case law, which I would argue possibly they they should get a bit more interested in that. So where everyone’s trying to avoid court, there are often compromises that get made. And so if a tenant’s receiving some advice on, well, here’s maybe your dilapidation’s exposure, why don’t you just offer the landlord this amount of money, see if he tapes it? And it may be slightly less than they they really do owe. But often the landlord goes, Well, I’d rather have what’s on the table than spend the next six, twelve months arguing about it. So they’ll take that settlement and then that’s their money to do as they wish to. So always I would always recommend spending it on the building, but some landlords do need a new Maserati, and that’s completely understandable.

Speaker 3: 21:03
Is that is that the car of choice then?

Speaker 1: 21:05
I don’t know. I think if you’re buying Maserati, you need to go second hand, otherwise you’d be losing a lot of money anyway.

Speaker 3: 21:10
Yeah, because I think they do five miles per gallon. That’s a big thing. Something like that.

Speaker 1: 21:13
Yeah, that’s not the rental.

Speaker 3: 21:15
Something like that. So on the on the other side then, so you know, how can tenants prepare? Would you say any any any advice or okay?

Speaker 1: 21:28
So there are well, there are two ways, well, there are many ways that tenants can prepare for dilapidations claims. So the best time to prepare is before the lease is signed. So unlike residential tenancies, there’s very little regulation. There is some regulation around commercial tenancies, but you can pretty much write whatever you want into a lease. And so while we can work with rules of thumb, we always have to look at the very niggly lease wording because one word changed can completely change what, for example, the repair. Covenant means. So it’s always a good idea as a tenant to ask a building surveyor that is well ingrained in the world of dilapidations to go and inspect the property, then explain how the lease that they’re silent relates to the condition of the property, and also explain to them the cost of repairs likely to arise over the lease, and also what their dilapidations exposure is. So not many surveyors will have a specific product for this. A few years ago, we created what we call the leaseholder survey. So it wraps up: here’s what you’re signing up to, here’s what your lease says, here’s the condition of the property. Like I said, here’s how much it’s going to cost you to maintain, here’s how much you’re going to owe your landlord at lease end. But actually, here are some suggested changes to the lease. So, like I said, you might be able to change just a few words in the lease, and that will save the land, uh, the tenant a lot of money. So, for example, something a lease I looked at this morning. So we we like to be involved in the local communities. There’s a charity taking on some new space. So I just did a quick lease review for them. They wanted to restrict their repair covenant by using a photographic change of condition, which is really, really good because it modifies the baseline for repair and that can save a huge amount of money when it comes to what is that, this photographic?

Speaker 3: 23:23
Can you explain that to you?

Speaker 1: 23:24
Yeah, absolutely. Um, so the baseline repair is that the tenant will put the property into good and substantial repair. The benchmark for that is pretty much what was the building like when it was new. And so if you’re going into a slightly rocket property, maybe one that’s three years old, 50 years old, it’s going to have some stuff wrong with it. So if you go in and formally record the condition of the property as it was at least commencement, you can then reset that standard of repair to how it was at least commencement rather than how it was when it’s brand new. So that’s a really important tool to limit repairing liability. Now, if you’re a solicitor working for the landlord, you want your lease to look like the tenants benefiting from that schedule of um condition. But quite often, as was the case this morning, they will word the lease to make it completely toothless. So this morning’s one said that the tenant shall keep the property in given substantial repair and in no worse condition than is evidenced by the schedule of condition. So basically, what that says is yes, it’s a bit ropey. Yeah, we’ve already set out that it’s got to be in good condition. And by the way, it can’t be any worse condition than the schedule of condition shows it to be. That’s a lot of condition. Right. Actually, you just need to change the lease where then say the tenant doesn’t have to return the property in any better condition than is evidenced in the schedule. And so that that one word can lead to tens of thousands of pounds worth of dilapidation savings, if it’s right or wrong.

Speaker 3: 25:06
You’ve got to have a really keen eye, don’t you?

Speaker 1: 25:09
You do. I mean, that one in particular, that’s quite common. So we’re always looking out for that. But yeah, there’s always a few niggly bits, and it’s it’s amazing how inventive people can be, and they just kind of try and sneak things into the lease. And a lot of time the tenants don’t really notice it, particularly smaller, smaller companies. No nobody likes paying for advice, and small companies particularly don’t like paying for advice, which is why I’m always very keen to give a little bit of free advice on a lease, because there’s such a power imbalance typically between landlords and tenants, which is, I guess, we’re the the UK kind of property scene isn’t alone in that, but it’s not like we receive any consumer protection as a business because we’re not consumers. Small businesses are, in the eyes of the law, pretty much on equal footing as big businesses. Whereas if you look to the codified law that they’ve got in the Netherlands, for example, there was a CDRO study a few years ago that said if you are exiting a 10,000 square meter office building, so like a big, big office building, it will be 17 times as expensive as it is to do that exit in the UK in comparison to the Netherlands.

Speaker 3: 26:22
17.

Speaker 1: 26:23
Isn’t that unbelievable? And so the reason for that is that some of the European codified law, they just try and make everything a little bit fairer for the tenant. Because, you know, particularly with offices, if you’re repairing an office to good and substantial repair and you’ve got to hand it back in cate condition, a lot of the time you’re gonna be painting the walls, you’re gonna be changing the ceiling tiles, you’re gonna be putting your carpet down. But then what happens if the new tenant comes in and goes, Well, carpet’s the wrong colour, I’m gonna repaint those walls. And actually, I want to strip out the ceiling and make it super cool industrial look. Well, you’ve embodied a load of carbon to start with, so it’s not very sustainable. But the tenant has spent loads and loads of money in putting it back to a nice cat A standard that’s immediately going to be ripped out. So I think the the I don’t know exactly what the solution is, but there are ways to make things a little bit more pragmatic and as a result, possibly fairer for the tenant.

Speaker 3: 27:17
So going back to the process when you you go out and you inspect, do you ever go back after repairs are done to then see has the work been done?

Speaker 1: 27:27
Oh, yeah, absolutely. So I mean, the yes, no, maybe sometimes every automation’s claim is different. So, like I said a bit earlier, some tenants will want to make an early settlement, in which case you don’t care whether the landlord’s done done the work because you haven’t hand the money over, regardless. In some other instances, the tenants, rather than getting an early certain settlement, they will want the lowest possible settlement. And typically that will take the longest amount of time because we want to know what the landlord’s actually doing with the property. So, you know, in an ideal world, we’ll take on a tenant, he’s got their schedule of dilapidations, we’ll go right, we’ll keep the pro the process moving along, but we do kind of want to slow it down just in case the landlord lets their property on exactly the same lease turns to the incoming tenant without having done anything. So if you’re take picking up a tenant with a dilapidations claim because they haven’t returned the property in good and substantial repair, and then the landlord sub subsequently signs somebody else up that has to return the property in good and substantial repair, the landlord doesn’t have any loss from that because they’ve got somebody on the hook for exactly the same terms somewhere else. So you don’t actually end uh you don’t actually owe the money in that situation. Okay, so it isn’t it is a black and white, is it? It’s not black and white, and it things go across the whole spectrum. There might be a little bit of future tenants picking up a bit of the risk, they might pick up all of it, they might pick up none of it, but then you’ve got a very difficult situation for the landlord to prove a theoretical future loss. So it’s quite common for the landlord to make a relay where there was previously no schedule of condition, but now the new tenant is protected by a schedule of condition. So now you’ve got like a gap that the landlord theoretically has to deal with at some point in the future when the new tenant leaves between absolute repair and repair protected by a schedule of condition. Okay. But then, like it’s it’s at that stage it’s a theoretical loss. So there are ways if you wanted to drag it to court, you could get some sort of settlement, depending on the pragmatism of the surveyors, you might get a settlement. But a lot of the time that will happen on a property that may be nearing the end of its useful life anyway. So if one one example that we dealt with recently was an industrial unit that had a church going into it, so it would be coming out, one church going in, and there was a providation screen that ended up with that gap between the two. It’s like, well, is this going to be a church after this church? Is the building gonna be completely refurbished? Is it gonna be demolished and made it to housing? But we don’t know what’s going to be happening with the property in the future, so we don’t know whether there’s actually a loss to talk about. Yeah.

Speaker 3: 30:22
Oh wow.

Speaker 1: 30:23
Not straightforward.

Speaker 3: 30:25
No, no. What is it? What is it you love about this then, Tim?

Speaker 1: 30:29
About what you do? Well, I think growing up as my sister will probably attest, I was always a very argumentative child. And so it’s really nice to go and argue. We have structured arguments, but to be paid to go and argue with people, and it’s just wonderful. I think if I’d have studied a bit harder, maybe I could have become a litigation solicitor. But it’s also really nice to get out and about, go and have a look at buildings and be able to talk to people. I think from that perspective, one of the benefits of being a dilapidation surveyor rather than a dilapidation solicitor is that we’re able to say what we want to say in the words we want to use. So I had a bonding moment with another surveyor years ago in the basement of an ex-Barcleys bank, and I was basically yelling at him going, There is no way that any incoming tenant is ever going to renew this switch game. And I was like, I’m having a lovely time, but also what has life become? And now we’re really good friends. He’s become a mentor for me for a while, and yeah, really nice, love and time, but there’s no way that his solicitors they could argue about that claim in that same way and just get things done so quickly.

Speaker 3: 31:40
Yeah. Yeah. So with regards to sort of the work I’m thinking of people listening who the have thought about this as a career or could have been something different, or even you know, potentially students, what sort of typical days like? And what’s the sort of mix between inspections, being outside, reviewing leases, that kind of thing?

Speaker 1: 32:05
Well, no, no day is typical. Um, so while I would love to be doing dilapidations as just my full-time role is dilapse and dilapse and dilapse, I do have to manage the company and I do a lot of technical due diligence as well. So both commercial and residential due diligence. So, in in terms of dilapidations claims, I think reviewing the lease is probably quite a small part of what we do because there’s typically those five main clauses and a few ancillary clauses. So once you’ve read them and you’ve understood them, it might take a couple of hours to inspect the property, depends on how big it is. And then a lot of it is kind of paper pushing and sending long emails, writing Scott scheduled responses. So, yeah, it really depends on the claim. So we can have small claims that will linger for six, nine months, maybe over a year. Then we can have much bigger claims a lot quicker. The biggest claim I’ve got at the moment is for I think £1.7 million. That took I’m working tenant side on that one. Took me two days to run through the the schedule. So two long days on a huge industrial estate up near Birmingham. Oh wow. And then that was like two years ago, and I haven’t heard from the landlord surveyor since. So got no idea what’s going on with that. Really odd.

Speaker 3: 33:29
You must you may you must get to see. I’m just just thinking back to something I’ve always I’ve always been fascinated from very young age from um might sound a bit odd, but industrial estates. When I was younger, I did go on to industrial estates when I was younger. And I’ve always been fascinated by them. I don’t know what it is, but there’s one not not so far from where I live. And I don’t know.

Speaker 1: 33:53
Do you find that it’s you know, these big warehouses, um, there’s there’s two reasons as a surveyor, the industrial estates are great. Firstly, all things typically are pretty simple, and so they’re easy to work with, but there’s just like a bit of a mystery about these big grey boxes, isn’t there? So it just looks so boring on the outside, and then you go in like, wow, the manufacturing process that I’ve never seen before. This happened. I remember going into um a lush packing distribution place down in Paul, and it was coming up at Christmas time, they had the Christmas music going, they had inflatable snowmen. It’s like a massive party and they smelled fantastic, but yeah, there’s just some varied things go on that you just kind of you kind of don’t really think about it. But yeah, industrial estates are brilliant, but they’re not just changed.

Speaker 3: 34:42
Yeah, so you say the buildings tend to be quite straightforward, which which is interesting because I never really thought of it that way. I thought I I’m kind of thinking of some industrial sites, I’m thinking of the um one that’s up in the northeast, but I think that’s ICI sort of thinks a little bit different, that’s very complex. So, with regards to sort of career-wise, how do you get into DelApps? Is it building surveyor route? What’s the sort of typical routine?

Speaker 1: 35:11
Yeah, absolutely. So then when you become a commercial building surveyor, you’re expected to do a lot of different things. So it’s quite a different role from being a residential surveyor where you might get involved in looking at houses, providing evaluations of houses for varying purposes. Building surveyor is expected to understand all types of commercial uh well, depending on the role, all types of commercial properties. So that could be education, hotels, industrial, schools, retail. They’re also expected to understand a bit about the party world, which I find incredibly dull, but my colleague Faye absolutely loves. We need to be able to oversee building works, acting as contract administrator or employees agent. And a lot of us get involved in dilapidations. So if you really want to get involved in dilapidations, I think that the probably the best role is to find building surveying role in a property consultancy, so not necessarily a construction consultancy, but a property consultancy that ideally they will have in-house property managers or in-house commercial agents. Because they deal with that kind of the transacting process, they’re able to kind of cross-refer refer this kind of work, which is really where you could build up your experience. So I think once you start doing dilapidations, you do have to do a lot of a lot of CPD, self-directed CPD. And I think this is where quite a lot of dilapidation spares, but even those with a lot of experience, they’ll fall down. So in the early early days, I always kind of knew I wanted to argue. So dilapidation is great. As soon as I had exposure to dilapidation stuff, I would just Google every tiny little niggly point. There are so many really good, wordy, lengthy documents, at least by barrister’s chambers, that cover so many aspects of dilapidations. And I find it fascinating to read those, to read all the case law that comes up. And that really arms you with the tools you need to construct a really well-thought out argument as to either why your client should be paying my client loads of money or why my client should not be paying your client loads of money.

Speaker 3: 37:20
So there is it is really there is quite a lot of that leans on the sort of the legal side to it, isn’t there? You know, with that argument. Yeah, they’re absolutely seriously.

Speaker 1: 37:32
What I like about that is naturally, because it’s dispute work, we get referrals from solicitors, which means I am that meeting a lot of solicitors. I really like chatting to a property litigation solicitor in particular, because we can, you know, share share war stories about oh, you never believe what the stupid stuff that’s happened in this case. But it also puts us in a really good position with commercial property solicitors, who are the people that prepare the leases. They’re they’re different people to the people that argue about the leases, in terms of, oh, I’ve I’ve noticed that you put this in that clause. Have you considered wording like this, or have you considered this aspect? Maybe you should change the wording on that, or you know, so it’s quite nice that we’re now in a position where we could be helping the solicitors to draft better leases.

Speaker 2: 38:20
Okay.

Speaker 1: 38:20
Which is yeah, yeah, which is really good. So I think one of one of the other really rewarding aspects of being a dilapidation surveyor, it doesn’t happen too often, luckily. Sometimes, particularly with the smaller businesses, we will have somebody on the phone in tears because they’ve received this massive delapse claim. Yeah, there’s no way I will be able to pay that. It’s just too much money. And we can kind of guide them through everything we’ve talked about and say, well, just because you’ve received that big dilapidation as climate, it doesn’t mean it’s going to end up anywhere near that. And so after maybe 30 minutes, an hour on the phone, suddenly their world has changed. They haven’t been sleeping for a week, and now they’ve kind of been able to put everything in perspective. It’s not as bad as it seems, and there are things that we can put in place to protect you. So even if everything has gone wrong, they didn’t take 3D survives and they haven’t maintained the building and they didn’t decorate the walls before they left. Even with a big claim, there’s always something that we could do just to make everything a little bit more sensible.

Speaker 3: 39:23
I imagine that would happen quite a lot, especially with smaller businesses who uh have struggled and then they have to close the business and things like that. And they don’t have the money to do it, repair work, or you know, they’ve had other, you know, people forget, don’t they? And they’re just literally surviving trying to make their business work.

Speaker 1: 39:41
That’s right. Yeah, and I I think a lot of landlords are pragmatic if that’s the case. There’s no point in pursuing a claim against somebody that’s got no money. And I that’s something that we do have to think about relatively often. And it may not be that the person has no money, it may not, it may just be that the limited company into which they’ve entered the lease has no money, and that they’ve kind of deliberately maybe run it down somehow. I’m not really sure about the legalities of that, but you do have to keep half an eye on is there the equity in the limited company we’re going after? Because if there’s not, I’m just going to charge you, Mr. Landlord, my fees for no benefit. Ah. So we do have to look at that. But yeah, certainly from the from the tenant side, we can make such a massive difference. Now, when the landlords aren’t pragmatic, that could be where the issues arise. So a couple of years ago, I came across a landlord that didn’t want to pay for his own building surveyor to produce a schedule. He spent two days crawling across the building to try and find absolutely everything wrong with it. He’d presented the claim not in accordance with any kind of format that I’ve ever seen. It’s very difficult to understand the claim. And the landlord represented himself just couldn’t get his head around the fact that breach doesn’t mean a loss. And so over this was over COVID, we ended up on a on a Teams call, and I got to the point where I just lost it a bit with him, which is so really unusual. But we just gone around in circles so many times. The landlord’s colleague just said, Can you not use language like that? Like, well, do you have more reasonable claim then?

Speaker 3: 41:24
Oh my god, honestly, did you tested you to your limits?

Speaker 1: 41:30
I’m so angry. Unfortunately, same building, same landlord, lease any coming up, but at least this time I’m already working with the new tenant. I didn’t deliberately seek this just pure coincidence. I recently gave them gave him some some advice. We’ve had, let’s say, a briefing session on how to deal with this individual.

Speaker 3: 41:50
Okay. Yeah, I guess like in like in anything, any conversation I have with surveyors, there’s always such a big people element to it all. I mean, yeah, you’ve got to be technically on it, keep up to date with everything. But dealing with those difficult conversations like that is something that no amount of training prepares you for.

Speaker 1: 42:10
You just learn from it, I guess. The nice thing about coming across difficult people is you tend to get a story out of it. So uh, you know, if if nothing else, it buys you fighting down the pub, doesn’t it?

Speaker 3: 42:22
Indeed it does. Yeah, indeed it does. So we’ve covered quite a lot. And I’ve I’ve definitely learned a lot of this of this uh discussion, Tim, um delaps, lots of things I didn’t know. Before we wrap up today, is there anything else that particularly you want to talk about? I don’t know, we’ve covered quite a few things. Anything that we haven’t covered?

Speaker 1: 42:43
Oh, I mean, we we have covered quite a lot. I think the the key thing is, you know, I’d imagine a lot of people listening to your podcast are operating businesses. And so unless they are properly ingrained in the world of dilapidations, coming up to a lease event, if they’re moving out of a property or going into a property, the return on investment of a couple of hours of surveyors time, because sometimes that’s all you need, is going to be huge. You know, it could be 10 times, 40 times. Um, so it’s always worth paying for advice. I know that’s not what small businesses want to hear, but a little bit of professional advice will pay you back many, many times.

Speaker 3: 43:20
Oh, absolutely. 100% any kind of professional advice, it’s it is priceless, I think. You know, I’m not being biased, it just is. And you can save, like you say, even someone will be really stressing over it big time, a tenant. That’s it. And they could have a call with you, conversation, and it’ll just make them feel more at ease because they they understand things. I think a lot of you know, stress comes from not understanding and fear of the unknown and what to expect. And I think you have to relay that in some layman terms. Yeah.

Speaker 1: 43:56
When people are caught up in that, there’s suddenly in a place where they’re not even able to write. Their business because they’re just kind of paralyzed by this fear of the unknown, like you say. And so just having that chat means that they can get on with trading. And you know, if if they do need to raise another few thousand pounds to pay for the applications bill, well, go and earn it. It’s some sometimes the advice, you know, just you’re gonna need to do more business. I do remember a couple of clients where you know I’ve grown my business on a networking organization called BNI, which I’ve only just left after seven and a half years. Um, but when advising kind of small businesses, like well, so where do you where do you bring your business in? Oh well, don’t know really, it just comes to us. Yeah, well, okay, so there’s only going to be a limited amount of stuff I can do for you. But if you do need to like generate more revenue, how about network? Yeah, yeah. It it doesn’t work for everybody, not everyone likes networking, but we definitely we love networking. I love networking. I do. So we do try and provide advice that kind of looks at every angle rather than just oh, it’s that bit of case law set about scratching on the door or whatever.

Speaker 3: 45:06
Yeah. And you do some quite good stuff on YouTube, I’ve started to uh to notice as well.

Speaker 1: 45:13
Thank you very much for asking it.

Speaker 3: 45:16
Yes.

Speaker 1: 45:16
Yeah, so our YouTube channel, the the aim of that is to provide some quite technical answers to some surveying questions. So sometimes when I’m Googling stuff, I come back with my own results that I’ve written written about. But I know there’s quite a few content creators now um creating content about surveying stuff. And I think a lot of that is done for entertainment. So our YouTube channel, I mean, let’s be honest, some of it is really boring, but it is informative and it yeah you know it is there to answer a very specific question that somebody might need the answer to rather than to provide you 10 minutes of hilarity while you’re having your Friday dinner or something like that.

Speaker 3: 45:56
But I think we need this is what we need though. It’s it’s great that you’re doing that because we need more of this, and it’s it’s it’s a very small proportion of surveyors, you know, are on on YouTube or on social doing video at all. It’s a tiny proportion, and I think it is the medium by which a lot of people like to learn. I mean, it’s at least for me, visual audio, but it’s also the more of if you can imagine if more and more surveyors did it, that spreading the awareness of surveying would help one of those huge issues we have. That’s not people not knowing about the profession, not knowing it as a career and what the options are out there. And if you just stumbled across something one day on YouTube, it could it could change the career you take.

Speaker 1: 46:41
And we want to be producing more and more content like that, Harrison Clark. So I think it probably about a year ago, maybe a couple of years ago, we kind of really defined what our vision is. And our vision as a company is to provide accessible property advice. And so it’s all very well going, yeah, I’ll I’ll give you that advice and I’ll send you a massive bill at the end of the day. Because let’s face it, surveying services aren’t particularly cheap. Not everyone has the money to go and get the best advice, but if we can get that video content out there and help people at least get to the right starting point, we also do a whole load of CPD with other organizations to make sure they get their processes right and they can help avoid disputes. Um, but ultimately, if I could have a video on absolutely everything in the building survey world and nobody came to talk to us, that would be wonderful. Except I would then be poor. So but yeah, we so and alongside that, each of our Fiennas has a pro bono allowance, so we can deal with charities at either cut cost or no cost at all. Um like likewise with tenants, uh residential tenants, if they can’t afford advice, then we will take things on a case-by-case basis. So, yeah, we we really do want to create that accessibility of advice, not just you know, setting our bills out. Well no, I do I do.

Speaker 3: 48:02
No, I I can see that. I’ve seen that with Hanson Clarks, I’ve seen the the things that you do, and I think it’s great, and uh you’re doing a lot of things that will help people long term, and it is it is that accessibility, and you know, it isn’t about because I think now, well, even more so now in this day and age, around marketing, your business, your your professional service, is you give something of of value that helps inform or educate someone, they remember you, and then if they’re ever in that situation or they are in a position that they think, oh, that was really helpful, yes, and it gives you that authority and there’s the trust there, and then they’re more likely to instruct you. And that’s the kind of thing I keep saying, just generally in cross-surveying, yeah, just share that knowledge, educate people, you know, buying properties and things, just do that kind of thing because you’d be amazed at how that will help you long term, and you’re not giving away all your secrets, you know.

Speaker 1: 48:59
Well, you can’t. There’s not enough time on video. I think we we probably have figured out through the course of this interview that dilapidations is not black and white, everything is case-dependent, things can hinge on a word, and you you just can’t get that level of nuance into a video. But what, like you say, what you can do to say, Well, I’m talking to you from a position that I know what I’m talking about, and say, Look, here’s some nuggets, have a little look at those, and then we’ll help you pick everything up if you need to take it further. And so, yeah, the the trust is fantastic, and particularly with Faye and her party walk stuff, clients sorry, appointing owners, not clients, party wall, and they uh they get thankful with the the famous Faye. Oh, I’ve seen your video.

Speaker 3: 49:43
She is famous, she is famous. Yeah, she is she does an amazing work in that space. Yeah, when I had a conversation, she loves dealing with people. That that kind of difficult because it’s quite emotive, parting wall. Yeah, absolutely.

Speaker 1: 49:57
So Faye Faye has come into the world of party law, which historically has been dominated by the straight white men, as is you know the case in much of the day. And she’s well, maybe not feminized it, but just kind of taken a relationship first approach. So rather than oh yeah, you need these party wall neighbors, I’ll get those set out tomorrow. She goes, Oh, what’s what’s the your relationship with your neighbour? Do we need to sweet talk them? Do we need to take the time to explain what’s going on? Is there something of relatively low value that we can give to them to make sure that you get things signed up? And like it’s so important. All these relationships that just kind of get ignored because we’ve got bits of documentation to deal with, and suddenly this bit of paper is more important than the people. I think that’s how Faye’s managed to kind of mix up the participle world a little bit. And she’s yeah, doing some really nice work in experts.

Speaker 3: 50:52
She is, because the general public don’t have a clue, and it is just emotive, and it’s just it can be massively upsetting for somebody.

Speaker: 50:60
Yeah.

Speaker 3: 51:00
To have someone just relay it. I think it’s also relaying it in in layman’s terms, in simplicity and empathy and understanding their situation, and then going, well, this is what you need to do, rather than going, coming into this situation with, I don’t know, I’ve been a surveyor for 55 years and this is this is how it’s done, this is what you need to do, tick box done. It’s that it’s it’s both the technical and the emotional communication skills, which seems to be the most popular thing that gets mentioned, is how you deal with people on this podcast. It you know, it’s interesting, but all the things I talk about, it’s it’s that soft skill side that is so important. And I think that’s one of the things that Faye shines in.

Speaker 1: 51:40
Oh, she she’s helped build the culture of Howard as a party, it’d be a completely different place without her. So if there are difficult conversations to be had, quite a lot of the time I will take myself out of the situation and and let Faye deal with that because I’m incredibly good at putting my foot in things and just saying the wrong thing. So if there’s yeah, delicate conversations phase your person. Yeah. If there’s kind of a strong strategy to be built that needs to be churned along, twished along, that’s probably what I’m better at. But then, yeah, people phase incredible.

Speaker 3: 52:14
But this is why you make a good team.

Speaker: 52:16
Yeah, exactly.

Speaker 3: 52:17
We’re more with the argument argumentative and you’re better dealing with that at the moment than me.

Speaker: 52:27
Then we’ve got a bill that’s not been paid. Right, okay, cool, let’s go.

Speaker 3: 52:31
Yeah, exactly. Yeah, I can see how that that team can work very, very well, I’m sure it does. No, it’s been great. Thanks very much, Tim.

Speaker 2: 52:38
Thanks, Nina. Thank you for listening to This Is Surveying. If you enjoyed this episode, please subscribe and leave a review. It really helps more people discover the podcast and supports the work we’re doing to raise awareness of the profession. You can also join the Surveying Room, the free and independent community from Surveyed UK, bringing surveyors together, breaking down silos, and of course making surveying visible. Just head over to surveyors UK.com to learn more and join today. All the links discussed in today’s episode are included in the show notes.