Leaving Lease Events to Chance Can Have Costly Conclusions

Lease events have always been critical milestones in the lifecycle of commercial property, but in today’s market they carry even greater weight. With investor confidence returning, base rates easing and capital values beginning to stabilise, lease events – such as lease renewals, rent reviews, subletting applications, dilapidations claims, compliance checks and service charge reconciliations – are surfacing more frequently, and often accompanied by legacy complications that now need to be unwound to protect and enhance asset value.

At SRVO, we’ve been working through several lease event reviews recently on behalf of a wide range of clients including private family offices and property funds. These have ranged from resolving historic subletting issues, through to recalculating complex service charge apportionments on mixed-use estates across London. In one case, fractional service charge allocations had not been correctly applied for years, meaning once we were appointed, we needed to deliver significant adjustments to bring the scheme back in line with the lease provisions.

What’s clear is that lease events can no longer be treated as tick-box exercises. A joined-up approach is essential ensuring service charges are apportioned fairly, utilities are properly metered and billed, and lease obligations are consistently enforced. Without this, issues build up over time and become costly — not only in terms of cash flow needed for major works, but also in safeguarding the long-term value of the asset.

A few practical lessons from our recent work:

Dilapidations: Getting in early pays dividends. In one major claim, clear specifications and early dialogue ensured the tenant carried out repairs ahead of lease renewal, avoiding protracted negotiations and preserving rental income.
Subletting & Occupation: We uncovered a tenant who had sublet the residential upper parts outside their lease terms, creating insurance and compliance risks. A Section 146 notice was served to put the tenant on notice of breach, requiring the sublet to be unwound and the occupation regularised. We also required evidence of lawful residential (HMO) use of the upper parts to be provided pre-completion to ensure the lease reverted to its original terms and compliance was maintained.
Service Charges: Mixed-use schemes are particularly sensitive. In Romford and Wimbledon where we manage several commercial assets, we’ve seen how getting the allocations wrong can distort budgets and erode trust with occupiers.
Utilities: One asset was still paying standing charges on dormant meters that no one had reviewed in years — costing thousands unnecessarily under previous management. These are details easily missed, but essential to protecting Net Operating Income (NOI).

Our framework for lease advisory support

To help our clients preserve the value of their portfolios, we apply a structured approach:

Planning – Track all upcoming lease events in advance powered by our CRM system, WIP schedules and leading software platforms
Data Review – Gather lease documents, budgets, contractor records, and correspondence, ensuring all documentation is consolidated and in a central repository
Analysis – Identify risks, gaps, and opportunities for negotiation.
Recommendations – Provide clear recommendations for action that deliver on the clients’ strategy, either through serving notice, renegotiating terms, or commissioning a dilapidations survey, for example
Implementation – Work with internal and external professional teams to execute efficiently and deliver to our clients’ expectations

In a market where landlord and tenant interests rarely align perfectly, proactive lease management is more important than ever. Getting ahead of lease events not only prevents disputes but also protects capital value and ensures assets remain income-producing without last-minute firefighting.

The key takeaway: don’t leave lease events to chance. With the right planning and execution, they can be powerful tools to preserve and enhance investment performance.