Dilapidation Guide for Landlords: Everything You Need to Know

This Dilapidation Guide for Landlords is designed to help property owners navigate the complex legal, technical, and practical aspects of dilapidations claims, protecting their investments while avoiding common pitfalls.

When a commercial lease comes to an end, landlords often face the critical issue of dilapidations : ensuring their property is returned in the condition promised in the lease, or obtaining compensation if it isn't.

What Are Dilapidations?

"Dilapidations" refer to breaches of a tenant's obligations under a lease to maintain, repair, decorate, and yield up a property in an agreed condition.

Landlords have the right to enforce these obligations, either by compelling the tenant to carry out the necessary works or, more commonly, by seeking financial compensation.

Why Are Dilapidations Important for Landlords?

Preserve the asset value of the property

Minimise void periods by ensuring a marketable condition

Provide fair compensation for breaches

Prevent tenants from exiting leases without fulfilling contractual duties

A well-managed dilapidations process ensures that landlords are not financially disadvantaged by a tenant's failure to maintain the premises.

Legal Framework for Dilapidations

Lease Covenants - These specify the tenant's obligations regarding repair, decoration, and reinstatement.

<a href="https://www.legislation.gov.uk/ukpga/Geo5/17-18/36/section/18" target="_blank" rel="noreferrer noopener">Landlord and Tenant Act 1927 (Section 18)</a> - Caps damages for disrepair to the diminution in value caused by the breach, preventing a "betterment" windfall.

<a href="https://www.justice.gov.uk/courts/procedure-rules/civil/protocol/pre-action-protocol-for-claims-for-damages-in-relation-to-the-physical-state-of-commercial-property-at-termination-of-a-tenancy-the-dilapidations-protocol" target="_blank" rel="noreferrer noopener">Dilapidations Protocol (Pre-Action Protocol)</a> - Part of the Civil Procedure Rules, this governs how claims must be handled before litigation, promoting fair and timely resolution.

<a href="https://www.rics.org/profession-standards/rics-standards-and-guidance/sector-standards/building-surveying-standards/dilapidations-in-england-and-wales" target="_blank" rel="noreferrer noopener">RICS Professional Standards</a> - Best practice guidelines for surveyors when dealing with dilapidations.

Step-by-Step Dilapidation Guide for Landlords

1. Review the Lease

Before initiating any claim, carefully review the lease :

What are the tenant's specific obligations?

Are there any schedules of condition attached?

What are the reinstatement provisions for alterations?

Are there any decoration or repair intervals?

2. Inspect the Property

A thorough inspection at or near lease expiry is critical. Ideally, instruct a qualified chartered building surveyor with experience in dilapidations. The survey should :

Identify breaches of lease obligations

Distinguish between genuine disrepair and fair wear and tear

Note any alterations requiring reinstatement

3. Serve a Terminal Schedule of Dilapidations

Prepare and serve a Terminal Schedule of Dilapidations within 56 days after lease end, in line with the Dilapidations Protocol. This document should :

Itemise each alleged breach

Reference the relevant lease clause

Specify the remedial works needed

Include estimated costs

Remember to include the required endorsement confirming your intention regarding remedial works.

4. Quantify Your Claim

Prepare a Quantified Demand, which sets out :

Cost of repairs

Professional fees (surveyor, solicitor)

Potential loss of rent during repair works

Service charges or other associated losses

Ensure costs are realistic and can be substantiated with evidence, such as contractor quotes.

5. Respond to Tenant's Defence

After serving the schedule, the tenant is expected to respond within 56 days, typically using a Scott Schedule. The tenant may :

Admit certain breaches

Dispute specific items

Challenge the scope of repairs or the cost

Argue that Section 18 limits your claim due to minimal impact on the property's value

6. Consider Diminution in Value

If the tenant raises a Section 18 defence, you may need a diminution valuation to prove the extent of value loss. It might cap your recoverable damages to the reduction in the property's market value caused by the disrepair.

7. Negotiate a Settlement

Most dilapidations disputes settle without court action. During the negotiations process :

Be pragmatic rather than overly aggressive

Focus on big-ticket items that materially affect value

Consider alternative dispute resolution (ADR) such as mediation

Settlements typically involve a financial payment rather than forcing the tenant to do the works.

8. Litigation (If Necessary)

If negotiations fail, litigation is the last resort. When considering a dilapidations dispute the Courts will :

Assess the evidence

Apply Section 18 caps where applicable

Consider compliance with the Dilapidations Protocol

Remember that unreasonable behaviour by either party can affect costs awards.

Best Practices for Landlords

Inspect Regularly : Periodic inspections during the lease term can identify breaches early.

Keep Records : Maintain clear records of the property's condition, tenant alterations, and communications.

Act Promptly : Serve schedules and quantified demands quickly after lease expiry.

Mitigate Loss : Act reasonably to minimise your losses, such as repairing or re-letting promptly.

Engage Professionals : Use experienced surveyors and solicitors to strengthen your position.

Dilapidation Guide for Landlords : Common Pitfalls

Overstating Claims: Inflated claims can damage credibility and result in adverse cost awards.

Ignoring Supersession: If you plan to redevelop, repairs rendered unnecessary by redevelopment can't be claimed.

Failure to Follow Protocol: Procedural missteps can weaken your case and attract judicial criticism.

FAQs: Dilapidation Guide for Landlords

What is the difference between an interim and terminal schedule of dilapidations?

An interim schedule is served during the lease term to prompt repairs. A terminal schedule is served near or after lease expiry, forming the basis for a dilapidations claim.

How much time do landlords have to serve a dilapidations schedule?

The Dilapidations Protocol suggests serving a Terminal Schedule of Dilapidations within 56 days after lease expiry.

Can a landlord claim for improvements, not just repairs?

No. Landlords can only claim for breaches of repairing, decorating, and reinstatement obligations. Section 18 prevents recovery for "betterment" unless essential to fulfil the original standard.

What happens if the landlord plans to demolish or redevelop?

Under Section 18(1), if the landlord intends to demolish or substantially alter the property, damages for repairs superseded by that work may not be recoverable.

Can dilapidations be settled without going to court?

Yes. The majority of dilapidations claims are settled by negotiation or mediation without needing court action.

How long does a landlord have to bring a dilapidations claim?

Generally, landlords have six years from the date of breach (usually lease expiry) to bring a claim.

By following this Dilapidation Guide for Landlords, property owners can manage the end-of-lease process strategically, secure proper compensation, and maintain the long-term value of their assets.

If you need tailored advice or expert support on dilapidations claims, contact our specialist team today.

Get in Touch

Need help with a dilapidations matter? Our expert team provides tailored advice to landlords and tenants across the UK.

From initial inspections to final settlement, we bring clarity and confidence to every stage.

Dilapidations Guide for Landlords - Related Resources

Dilapidations Glossary of Key Terms

Understanding Section 18(1) and Diminution Valuations

Supersession in Dilapidations: What It Means for Landlords and Tenants

Dilapidations for Landlords blog

Contact

Our expert team have extensive experience of dealing with all dilapidations matters. We act for both landlords and tenants, ensuring a global approach to the dilapidations process.

We assist commercial landlords and tenants on all aspects of lease obligations, repair and dilapidations.

We provide specialist surveys, new lease schedules of condition and general dilapidations advice.

For any help or advice on repair obligations, Dilapidations issues; or to commission a schedule of condition for a new lease call us on 020 4534 3132 or contact one of the team :