Dilapidations

Whether you are a landlord pursuing a dilapidations claim at, or before, the end of a lease, or a tenant that has been served with a schedule of dilapidations that you consider to be excessive, our property disputes solicitors have extensive experience advising on commercial dilapidations disputes and helping clients achieve the best possible outcome.

What are dilapidations?

Dilapidations is the term used to describe a landlord’s claim against a tenant for breach of the repairing, decorating and reinstatement obligations contained in a commercial lease. Those obligations typically require the tenant to keep the premises in good and substantial repair throughout the term of the lease, to redecorate at specified intervals and at the end of the term, to remove any alterations made during the term of the lease and to reinstate the premises to their original condition.

Dilapidations claims most commonly arise at the end of a lease, when the landlord serves a terminal schedule of dilapidations, but a landlord may also serve an interim schedule during the lease if the tenant is in breach of its repair obligations. In either case, the sums in dispute can be substantial, and the legal and valuation issues involved are frequently complex.

Dilapidations claims are governed by a combination of the express terms of the lease, common law and statute, in particular section 18 of the Landlord and Tenant Act 1927, which imposes an important cap on the damages recoverable by a landlord. Understanding these different elements, how they interact and how the courts have approached them in practice, is essential to bringing or defending dilapidations claim effectively.

You will find answers to common questions around dilapidations disputes in the FAQs at the bottom of this page.

What does a dilapidations solicitor do?

Our property disputes team advises both landlords and tenants on all aspects of dilapidations, from reviewing repairing obligations at the outset of a lease to negotiating and, where necessary, litigating terminal claims at lease determination. The team works closely with specialist building surveyors to ensure that the legal and valuation aspects of each claim are properly coordinated. The team’s ethos is simple: solve the problem.

Our aim is always to resolve the dispute without the need for court proceedings (the majority of dilapidations claims are settled by negotiation between surveyors, supported by legal advice), but where that is not possible, our property disputes team has the experience and expertise to take a claim from service of the schedule all the way through to trial.

Why choose B P Collins as your dilapidations disputes solicitors?

Dilapidations disputes are among the most commercially significant disputes that arise between landlords and tenants. The figures in dispute can run to hundreds of thousands, if not millions of pounds, and the outcome can have a material impact on the economics of a linked transaction – whether that is a lease renewal, a sale of the freehold or the financial position of a business at the end of its occupation.

With over 60 years of experience, we’re consistently ranked by Chambers UK and The Legal 500 for the strength of our property disputes practice. Our solicitors have helped hundreds landlord and tenants navigate dilapidations disputes with confidence and clarity.

As with most disputes, early advice can frequently result in a swift outcome, avoiding unnecessary escalation and protecting your position before it becomes more difficult to assert.

Contact our dilapidations solicitors today

For further information or advice please contact our specialist dilapidations dispute lawyers. Our teams are based in London, Thame and Gerrards Cross, and can be contacted on 01753 889995 or at enquiries@bpcollins.co.uk.

Dilapidations FAQs

What is a schedule of condition?

A schedule of condition records the physical condition of the premises at the date a lease is granted, typically with a written description and photographs. Where a lease is entered subject to a schedule of condition, the tenant’s repairing obligations are usually qualified so that the tenant is not required to put the premises into any better state of repair than that recorded in the schedule. In other words, the schedule sets a minimum standard, so the landlord cannot require the tenant to return the property in a better condition than it was in at the start of the lease.

Should a tenant insist on a schedule of condition being prepared at the grant of the lease?

Ideally, yes. Agreeing to a schedule of condition (particularly for older or poorly maintained properties) limits the scope of any future dilapidation claims and should be considered carefully before it is conceded in heads of terms or lease negotiations. Schedules of condition can significantly reduce dilapidation liability at lease end, most notably for the cost of works that go far beyond simply maintaining the property in the state in which it was received.

If a schedule of condition is agreed, it is essential that it is thorough, accurate and properly incorporated into the lease by express reference. A schedule that is poorly prepared, incomplete or ambiguously worded can give rise to disputes of its own at the end of the term.

What is a schedule of dilapidations?

A schedule of dilapidations is a document served by the landlord on the tenant setting out the alleged breaches of the tenant's repairing, decorating and reinstatement obligations under the lease. Each item in the schedule will typically identify the breach, specify the works required to remedy it and include a costed estimate of those works.

A terminal schedule is served at or after the end of the lease; an interim schedule is served during the term.

A tenant who receives a schedule of dilapidations should not simply accept it at face value. An experienced building surveyor should be instructed to review the schedule and prepare a response, supported by legal advice on the proper interpretation of the lease.

What is the section 18 cap and how does it affect a dilapidations claim?

Section 18 limits the damages recoverable by a landlord in dilapidations claims in two ways:

Damages cannot exceed the diminution in the value of the landlord's reversion caused by the breach – in other words, if the cost of the remedial works exceed the reduction in the market value of the property attributable to the tenant's failure to repair, the landlord's claim is capped at that lower figure.
No damages are recoverable at all if, at or shortly after the end of the lease, the landlord intends to demolish or carry out structural alterations that would render the repairs valueless.

The section 18 cap is often the most effective defence available to tenants defending a dilapidations claim and should always be considered at an early stage. Establishing the diminution in value of the reversion requires specialist valuation evidence from a qualified surveyor. The section 18 analysis should be integrated with the legal advice on the scope of the repairing obligations and the costs of the remedial works.

Should a tenant carry out repairs before the lease expires?

In many cases, yes. Carrying out remedial works before the lease expires is more cost-effective than paying damages to a landlord after the fact.

However, it depends on circumstances. For example, if the section 18 cap reduces the claim paying damages may be more cost effective, or if the landlord’s future plans for the property may affect the works to be undertaken (i.e. if the landlord intends to demolish the building, no works may be required). The right approach depends on a careful analysis of the specific facts, the terms of the lease and the landlord's intentions for the property.

Ideally tenants should seek legal and surveying advice at least 12 months before lease expiry.

What is a terminal schedule of dilapidations and when can it be served?

A terminal schedule of dilapidations is served at or after the end of the lease, setting out the landlord's claim for breach of the tenant's repairing, decorating and reinstatement obligations.

A landlord may serve the schedule before the end of the lease (as a 'last chance' notice to the tenant), on the day of expiry, or at any time within the applicable limitation period after the lease ends. The landlord must be careful to ensure that there is no contractual provision in the lease that requires a terminal schedule to be served within a specified time period.

The limitation period for a landlord to bring a dilapidations claim is generally 12 years where the lease is made by deed (as most commercial leases are) or 6 years where the lease is made by simple contract.

How is a dilapidations dispute resolved?

Most dilapidations claims are resolved by negotiation between the parties' surveyors, supported by legal advice, without going to court. Following The ‘Dilapidations Protocol is effective in narrowing the issues and facilitating settlement before issuing proceedings. Where the dispute cannot be resolved by negotiation, the parties may consider:

Mediation, particularly well-suited to dilapidations disputes, where the parties often have a continuing relationship (for example, where the tenant is seeking a lease renewal) or where the costs of litigation would be disproportionate to the amount in dispute.
Expert determination, an independent expert whose decision is binding. This can be a faster and more cost-effective alternative to litigation, particularly where the issues are primarily technical rather than legal.
Court proceedings, used as a last resort. The court has power to award damages, make declarations and, in appropriate cases, grant injunctive relief.

Who pays the costs in a dilapidations dispute?

The unsuccessful party usually pays the successful party's costs. In disputes that go to trial, costs can be substantial. Early advice and proactive settlement negotiations are invaluable: significantly reducing overall costs. In resolved agreements, parties often agree to bear their own costs or negotiate a contribution from one side to the other, depending on the strength of their respective positions.

Do I need a solicitor or a surveyor or both in a dilapidations dispute?

Usually both. A specialist building surveyor assesses technical aspects of the claim.

Solicitors advise on legal questions (the proper interpretation of the lease, the application of section 18, limitation, and the conduct of any litigation) and technical questions (the condition of the premises, the scope and cost of the remedial works required, and the diminution in the value of the reversion).

Our property disputes team works closely with experienced building surveyors, taking a combined approached to reach the best outcome.

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