Dilapidations: are the tensions understood by stakeholders?

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Mahony, C., 2024. Dilapidations: are the tensions understood by stakeholders? EngD, Nottingham Trent University.

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Abstract

Purpose

Dilapidations continues to attract interest amongst professionals in the built environment. Guidance for Chartered Surveyors is provided in the Royal Institution of Chartered Surveyors Dilapidations Guidance Note (2016), and the Dilapidations Protocol (2012) describes the way in which the parties to a dispute should conduct themselves and present the claim and response. Section 18 (1) of the Landlord and Tenant Act 1927 sets out the way in which damages (the landlord’s actual loss) is measured both during and at lease end. Since then, no further statutory intervention to define or refine the measure of damages has been enacted. Despite this, dilapidations continue to be challenging, sometimes leading to lengthy delays and increased cost to both parties to the dispute before a claim is resolved.

A lease is a legally binding agreement that sets out the terms and conditions under which the tenant may use the property for a pre-determined period in exchange for agreed upon payments. The tenant will keep and return the property as specified under the terms of the lease. Dilapidations form an integral part of the lease journey and forms a vehicle for both parties (landlord and tenant) to make claims during or at the end of a lease. Breaches of covenants contained in a lease are set out in a schedule of dilapidations and commonly include a failure to decorate, repair, remove alterations and comply with statues. A dispute arises when the opposing party defends the claim.

Landlords and tenants frequently appoint surveyors to advise them and both prepare and defend the schedule of dilapidations. The parties to the dispute and their advisors work and conduct themselves within a recognised framework of guidance and procedures which are univocal to understand and achieve. However, dilapidations are often difficult, tactical, complicated and mis-understood and failings can result in serious consequences for either party. Tensions between the parties are common and manifest themselves in delays and increased cost, leading to frustration and anxiety. To date there have been no studies undertaken on dilapidations that seek to establish the reasons why dilapidations are difficult to resolve. The purpose of this study is to identify the critical factors that drive the decision-making process, how these and the behaviour of the surveyors influence the tensions and delays that lead to frustration, and how surveyors can better improve client service.

Research Methodology

Due to limited research in this subject area and non-existent data, the methodology adopted in this research combined a qualitative and quantitative approach which identified the reasons as to why dilapidations are sometimes difficult to resolve. The study comprised four phases which reflected the objectives of the research. The first phase included a review of the literature in the field of dilapidations. This identified the chronology of dilapidations, the regulatory and statutory frameworks, ethical and professional issues, disparity and bias, external influences and business and organisational risk. Collectively they were categorised into a number of tensions. The second phase consisted of a two stage Focus Group which assisted with the scoping of the research and elicited factors driving decision making which categorised the tensions into three clusters; Technical, Influential and Behavioural issues. The outputs from the Focus Group provided the key data for the third phase, the structured questionnaire. Surveyors ranked the difficulties by which they comprehend dilapidations, revealing that they had little control over behavioural issues which were the most difficult to manage. The results of the questionnaire were analysed further leading to the fourth stage, semi-structured interviews. These exposed further issues concerning cognition, meta-cognition, self-awareness, problem solving, communicating and reflection. The application of Repertory Grid techniques and analysis using Decision Tree and Statistical Correlation Analysis, revealed the way in which surveyors compare their experiences. Themes common to disputes are comprehensive and the skills required to resolve them include understanding emotional intelligence and negotiation.

Findings

The key findings arising from this research reveal that dilapidations are difficult to resolve because of an inability to perceive, understand and control human behaviour which goes beyond misunderstandings and lack of knowledge of technical issues. There is a strong correlation between settlement outcomes and complexity, and the management of complicated issues varies according to experience. This lack of experience contributes to the way in which the parties behave, resulting in tactical intervention which may lead to delays.
This research reveals 7 stages to a dispute through which the parties move unconsciously away from contractual matters to areas concerning negotiation, tactical approach, resilience, reasoning, emotional intelligence and the approach to dealing with others. When questioned, surveyors rated themselves closer to best practice than their opposing surveyor but acknowledged areas of uncertainty. However, the burden to produce and defend a schedule of dilapidations rests with the landlord’s surveyor.

This research significantly impacts the practitioner and academia. In practice, it should be recognised that a formulaic procedural approach to the presentation of dilapidations may not bring about a swift conclusion. Organisations require a greater understanding of the way in which the schedule is created to bring about a reduction in the number of criticisms it receives. Monitoring is required of both performance and emotional intelligence to bring about an understanding of how organisations reflect on their abilities to manage disputes. Specialised training should be provided to include negotiation and human behaviour in disputes, and mentoring is required to encourage and guide professionals throughout their careers with an increasing encouragement towards lifelong learning.

In academia, a reverse approach to understanding dilapidations is required, so that the importance of the concept of damages and loss is understood first followed by the technical aspects of inspection and report writing. The complexities of dilapidations, which deal with the surveying, legal and regulatory elements require separate detailed investigation following which the way in which they influence each other should be understood.

Item Type:

Thesis

Creators:

Mahony, C.

Contributors:

Name	Role	NTU ID	ORCID
Sagoo, A.	Thesis supervisor	CON3SAGOOA	orcid.org/0000-0002-9969-0771
Coffey, C.	Thesis supervisor	BLG3COFFECM	UNSPECIFIED

Date:

February 2024

Rights:

The copyright in this work is held by the author. You may copy up to 5% of this work for private study, or personal, non-commercial research. Any re-use of the information contained within this document should be fully referenced, quoting the author, title, university, degree level and pagination. Queries or requests for any other use, or if a more substantial copy is required, should be directed to the author.

Divisions:

Schools > School of Architecture, Design and the Built Environment

Record created by:

Melissa Cornwell

Date Added:

21 May 2024 13:36

Last Modified:

21 May 2024 13:36

URI:

https://irep.ntu.ac.uk/id/eprint/51457