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Government bodies 'to pay millions in dilapidation fees'
Wed 02 Jun 2010
New rules relating to the signing of new leases and lease extensions could lead to landlords claiming millions of pounds in dilapidation fees.
The coalition government recently launched the Efficiency and Reform Group, a new body which aims to reduce the government's expenditure on rented floorspace by £47 million.
Under the new rules, central government bodies will not be able to sign new leases or lease extensions unless the Treasury has approved them first.
Quasi-autonomous non-governmental organisations are also affected by the restrictions, which will remain in place until April 2011 and possibly beyond.
However, Property Week believes the changes could entitle the owners of the affected buildings to claim up to £70 million in dilapidation fees.
Barry Gilham, a solicitor in Winckworth Sherwood's Property and Dispute Resolution Department, commented: "If Treasury approval is not received, it is inevitable that a large number of dilapidations claims will follow as leases are brought to an end.
"However, estimating the extent of the claims faced by the government is difficult to quantify.
"Each potential claim will be dependent upon the terms of the individual lease, the condition of the property and whether the tenant has carried out its repairing obligations during the term."
The new rules relating to the signing of leases and lease extensions were unveiled as part of the government's strategy to address the UK's £156 billion budget deficit.
Last week, chancellor of the exchequer George Osborne outlined £6.2 billion worth of public spending cuts that will take place over the next year.
