How are damages for, or amounts attributable to, dilapidations assessed?

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    How are damages for, or amounts attributable to, dilapidations assessed?

    Can someone please advise on how damages are assessed for dilapidations? I’m thinking particularly where the tenant has stained carpets or curtains (both of which my let property now has).

    The property in question is not the type of property I would have chosen to let or furnished in a way I would have set out to furnish a rental property. The property was previously my home (prior to an unexpected relocation) and so I’d furnished it for my use with expensive furnishings and fittings. For example one of the carpets which is now stained costs GBP45 per sq m excluding the cost of underlay and fitting. The carpet had been in the property three years at the time the tenancy commenced.

    Also, where an obligation under the lease has not been carried out and rectification needs to be made for the next tenant (eg, the outgoing tenant has failed to clean curtains on moving out), how would you go about determining an amount attributable to that? Would you get a quote then deduct that amount from the deposit?

    It’s probably not relevant to my particular question but, by way of background, a requirement of the outgoing tenant was that we would make the property immaculate in advance of them moving in eg, we were required to ensure that there was not a single chip to painted woodwork.

    Thanks in advance for your help!

    #2
    I've now found an example within an older thread. I think calculation of an amount attributable in my stained carpet example might be as follows:

    Cost to replace carpet (with identical carpet including fitting) GBP1,200. Time carpet was used from fitting to tenant vacating property: 5 years. Expected life of carpet: 10 years. Damages assessed: GBP600.

    Perhaps someone might be able to let me know if this calculation looks appropriate.

    I'd also appreciate thoughts as to what to do in the other type of situation mentioned where curtains have not been cleaned, but I need to clean them for the new tenant.

    Comment


      #3
      There are a number of parallel issues.

      Where there is a contractual agreement for something to be done and it is not done, there is a general principle that compensation is due to remedy the contractual breach. As it's a contractual issue, the cost of the remedy must be kept to a minimum ("mitigated") and the outcome shouldn't be that the situation is better than it would have been. On a practical note, if the tenancy agreement contained a term that curtains should be cleaned, the appropriate compensation would be the cost of the cleaning that was then required.

      The landlord is entitled to compensation for any loss in value of their asset(s) beyond fair wear and tear that occurred during the lease.
      The formula that they should use, and a court (and the protecting company ADR process) will use is:
      (Cost of the original item and any installation/fitting (not the cost of a replacement) / expected lifetime) * (expected lifetime - actual lifetime).

      That is, compensation for the lost value (life of use) of the item. The replacement cost is usually irrelevant.

      That presumes that the item is entirely ruined and the landlord can show that it happened during the lease.

      Alternatively, an actual repair cost might be claimed, but again, this should be adjusted to reflect the tenant's share of the lifetime (but sometimes this is just meaningless).

      The tenancy sounds a little specialised - in that the incoming tenant's requirements seem very specific. Any lease has an implicit amount of wear and tear - the landlord is meant to expect that the tenant is going to be living in the property rented and will cause some depreciation in the property's condition just by being there. That's the notion of "fair" wear and tear. If the property is let at an essentially unsustainably high level, that might be complicated, but the general principle should apply.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        Post 2 assumes the carpet needs replacing. Go here: https://www.tenancydepositscheme.com...%20damages.pdf and scroll down to "Wear and Tear".

        Comment


          #5
          Originally posted by Lawcruncher View Post
          Post 2 assumes the carpet needs replacing. Go here: https://www.tenancydepositscheme.com...%20damages.pdf and scroll down to "Wear and Tear".
          Interestingly, that says
          "An example of how this might be calculated is set out below:
          a) Cost of similar replacement carpet/item"
          NOT original cost, as others here have suggested in a number of threads.

          Comment


            #6
            Current replacement cost may be accepted if replacement cost is reduced by applicable FW&T allowance.

            Comment


              #7
              Originally posted by MdeB View Post
              Interestingly, that says
              "An example of how this might be calculated is set out below:
              a) Cost of similar replacement carpet/item"
              NOT original cost, as others here have suggested in a number of threads.
              I didn't notice that.

              That example makes no sense - they're adjusting the value of a new item as though it was fitted when the tenancy began.

              There have been case after case (not related to property, the contractual principle applies generally) where the loss has been shown to be based on the original item not its replacement.
              The general argument for the replacement cost being used is - the purchase is only necessary because of the breach and the loss is therefore the cost of the replacement.
              The counter argument is that the new item has a new lifetime and a) will last the 10 years or whatever, not 8 and b) if it was again destroyed after 2 years, in reality, no adjustment would be made for the life already compensated by the previous agreement.

              There have been some exceptions, where the cost of the replacement had changed dramatically (either up or down) or the new lifetime went beyond any reasonable applicability (the replacement can't possibly last the proposed lifetime).
              Because the rules are generally applied, some of these cases are for huge sums of money (crashing a ship someone's leased isn't cheap), so they're the subject of serious litigation.

              But if TDS do actually work like that, gosh.
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment


                #8
                Originally posted by jpkeates View Post
                That example makes no sense - they're adjusting the value of a new item as though it was fitted when the tenancy began.
                It makes sense on the basis of "putting LL back in the position he would have been in had the T not caused the damage" (e.g where carpet has 10 year expected life and needs replacing at 8 because of damage):
                • LL has lost 2 years use of carpet.
                • Tenant is liable to put LL back in position he was in before the loss, ie 2 years of carpet life.
                • Putting LL back in that position means replacing the carpet now.
                • Replacing the carpet now means LL gets 10 years carpet life.
                • Therefore tenant should pay 2/10 replacement cost (giving the LL back his 2 years of carpet loss) and LL pays 8/10 as LL gets an additional 8 years of carpet life (whether or not LL wanted it).

                Comment


                  #9
                  Originally posted by MdeB View Post
                  It makes sense on the basis of "putting LL back in the position he would have been in had the T not caused the damage" (e.g where carpet has 10 year expected life and needs replacing at 8 because of damage):
                  But that's the point, the landlord isn't back where he was, he's better off.

                  A brand new carpet is better than a used carpet.
                  He has a shiny new carpet and 10 new years of carpet life (which is 8 more than he had before).

                  The landlord lost 2 years use of (presumably) well-worn carpet, bought at whatever the cost was in 2010.
                  The compensation based on 20% of the cost of a new carpet is higher than the loss (because the new carpet is more valuable than the old and has 8 years new "life", even if the cost of carpet and fitting has stayed exactly the same).

                  And it hasn't - inflation since 2010 would mean that a £1000 carpet purchased in 2010 would now cost £1164* (rounded up and assuming that carpet inflation matches inflation generally).
                  Two years of (10 years carpet life) loss is £200, not £232.80.

                  Both the additional 8 years life and the £32.80 are betterment (so the landlord wouldn't be back in the original position).

                  It's a compensation for loss, and the landlord may not want to buy another carpet and doesn't have to, but they're still entitled to compensation for the loss of £200.
                  You can't have one rule for a landlord who does replace the carpet and another for a landlord who doesn't, when the loss is identical in both cases.
                  Which is why I'm surprised at TDS' approach.

                  * The VAT rate was lower in 2010, so you might get less carpet for your £, but let's not get too complicated.

                  When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                  Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                  Comment


                    #10
                    Originally posted by jpkeates View Post
                    Both the additional 8 years life and the £32.80 are betterment
                    I don't understand your argument.
                    The 8 years is paid for by the LL

                    Comment


                      #11
                      Originally posted by MdeB View Post
                      I don't understand your argument.
                      The 8 years is paid for by the LL
                      The landlord doesn't have to replace the carpet, the tenant is compensating the landlord for "loss" to the "old" carpet.
                      So the new carpet is actually irrelevant.
                      Its own lifetime only matters to explain (as an academic point) why the position is as I assert.

                      In the model asserted by TDS, the landord is not back in the position they would have been in had the breach not occured,
                      They have a new carpet instead of a used carpet.

                      If the next tenant did exactly the same thing, would the landlord deduct the 2 years already compensated lifetime from the calculation?

                      My point isn't that the model used is perfect - in a perfect world the breach wouldn't happen*..
                      It's that the model is the one that courts apply** and (in my view) makes most sense.

                      * Or either no wear and tear at all or unlimited damage would be implicit.
                      **Notwithstanding the random nature of courts in practice
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment


                        #12
                        Originally posted by jpkeates View Post
                        In the model asserted by TDS, the landord is not back in the position they would have been in had the breach not occured,
                        They have a new carpet instead of a used carpet.
                        Yes, LL has a new carpet.
                        LL has paid for first 8 years of the new carpet.
                        T has paid for last 2 years of the 'new' carpet, which replaces the last 2 years of the old carpet that were lost due to T's action.
                        Therefore LL IS back in the position he would have been: an 8-year old carpet with 2 years life left.

                        If the next tenant did exactly the same thing, would the landlord deduct the 2 years already compensated lifetime from the calculation?
                        NO.
                        if you mean "LL bought new carpet and after 8 years T damages such that it needs replacement", then second tenant pays 2-year's worth.
                        LL was initially compensated for loss of last 2 years of first carpet; he was not given/compensated for last 2 years of second carpet, so there is no "2 years already compensated lifetime" to be deducted.

                        If you mean "LL got compensation but did not replace carpet", then second tenant pays nothing.
                        Carpet had no useful life and therefore any compensation would be zero.

                        Comment


                          #13
                          Originally posted by MdeB View Post
                          T has paid for last 2 years of the 'new' carpet, which replaces the last 2 years of the old carpet that were lost due to T's action.
                          Therefore LL IS back in the position he would have been: an 8-year old carpet with 2 years life left.
                          Those two statements are contradictory.
                          The two years of new carpet are not equivalent to two years of the old carpet.
                          Regardless of the actual price, new carpet is more valuable than old carpet to the landlord.
                          Newness has a value.

                          LL was initially compensated for loss of last 2 years of first carpet; he was not given/compensated for last 2 years of second carpet, so there is no "2 years already compensated lifetime" to be deducted.
                          If the landlord wasn't being compensated for any loss of the second carpet why would you use that carpet in any part of the calculation of loss.

                          The landlord doesn't have to replace the carpet at all, so using the value of a non-existent new carpet as part of the calculation of the loss becomes (hopefully) more obviously problematic.
                          Contractual losses have to be real.
                          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                          Comment


                            #14
                            Originally posted by jpkeates View Post
                            Those two statements are contradictory.
                            It may appear that way to you, but they are not.
                            If you consider that the T is providing the last 2 years of the "new" carpet, then what the LL is getting is
                            • a new carpet, for which he has paid for 8 years' worth
                            • at the end of 8 years, an 8-year old carpet which the tenant has paid for, with 2 years' life left and which replaces the 2 years lost on original carpet.

                            The two years of new carpet are not equivalent to two years of the old carpet.
                            Not at the time the LL puts in HIS money to buy HIS new carpet, but after 8 years they are equivalent.

                            Regardless of the actual price, new carpet is more valuable than old carpet to the landlord.
                            Yes, and 8 year old replacement carpet has the same value as 8 year old original carpet.

                            Comment


                              #15
                              The notion that the landlord is being compensated by the last 2 years of the new carpet's life is (frankly) a bit bizarre.

                              The compensation is for a loss that the landlord has incurred and is intended to put things as they would have been with no contractual breach.
                              Even assuming the landlord would be in the same position in 8 years time (which I am not sure is the case) you can't apply a remedy that will put things as they "would have been" a decade in the future, when the landlord has (finally) enjoyed the two years of life the tenant has paid for.

                              And, the new carpet doesn't have to exist, you can't use it in the compensation calculation.
                              The loss has to be identical whether or not there is a new carpet.
                              If the loss is different depending on whether there's a new carpet or not, one of those outcomes is better for the landlord and therefore it isn't a mitigated loss.

                              I am simply relating arguments about why it is done as I have said.
                              There isn't any doubt that it would be calculated as I have asserted in a court (unless there were very specific reasons otherwise).

                              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                              Comment

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