Terminal vs Interim Dilapidations

Terminal vs Interim Dilapidations: What’s the Difference and Why It Matters

In the commercial property world, dilapidations are a critical, often contentious issue. Yet many tenants, landlords, and even some property professionals struggle to fully understand the nuances between different types of dilapidations, especially Terminal vs Interim Dilapidations.

Knowing the difference between these two forms is vital — not only for legal compliance but also for effective lease management, budgeting, and dispute avoidance.

In this article, we explore the key differences between Terminal vs Interim Dilapidations, why the distinction is important, and how both landlords and tenants can protect their interests.

What Are Dilapidations?

Before diving into the distinction between Terminal vs Interim Dilapidations, it's important to clarify what we mean by "dilapidations".

In the context of UK commercial property, dilapidations refer to breaches of lease covenants relating to the condition of a property. These typically involve:

Repair obligations

Reinstatement of alterations

Redecoration duties

Landlords have the right to enforce these covenants either during the lease term or at lease expiry. This is where the difference between Interim and Terminal dilapidations becomes relevant.

Terminal Dilapidations: An Overview

Terminal dilapidations refer to the tenant's lease breaches that are assessed at or shortly before the end of a lease. These are the most common and well-known type of dilapidations claims.

Key Characteristics of Terminal Dilapidations :

Timing : Terminal dilapidations are usually enforced in the final months of the lease or immediately after lease expiry.

Purpose : Their primary goal is to ensure the property is handed back in the condition required by the lease — allowing the landlord to relet or redevelop the premises without incurring repair costs.

Scope : Includes all breaches of the repair, reinstatement, and redecoration clauses.

Quantification : The landlord may serve a Terminal Schedule of Dilapidations, and the claim is often quantified in monetary terms, especially if works are not completed before lease expiry.

Legal Framework : Governed by the Dilapidations Protocol (as issued by the Ministry of Justice), which outlines how claims should be handled after lease termination.

Importance of Terminal Dilapidations

Budgeting - Tenants must plan ahead to meet their lease-end obligations.

Valuation - Can significantly affect the value of the property and marketing strategy for the landlord.

Dispute Potential - High-stakes negotiations often arise, as terminal claims can run into hundreds of thousands of pounds.

Interim Dilapidations: An Overview

Interim dilapidations, by contrast, refer to breaches of repair and maintenance obligations that occur during the lease term, not at its end.

Key Characteristics of Interim Dilapidations :

Timing : Enforced mid-term or at any point before lease expiry.

Purpose : Focuses on maintaining the condition of the property throughout the lease to prevent long-term deterioration.

Scope : Typically involves repair and maintenance but not reinstatement or end-of-term redecoration.

Action Taken : The landlord may serve an Interim Schedule of Dilapidations and potentially take legal action to compel compliance.

Tenant Rights: Tenants usually have the opportunity (and obligation) to carry out the works themselves, rather than simply paying damages.

Importance of Interim Dilapidations

Preservation - Helps landlords ensure the property doesn't fall into disrepair during the lease.

Lease Compliance - Demonstrates whether the tenant is fulfilling ongoing covenants.

Legal Leverage - Provides grounds for landlord enforcement and even forfeiture in extreme cases.

Terminal vs Interim Dilapidations: The Core Differences

Why Does the Difference Between Terminal vs Interim Dilapidations Matter?

Understanding Terminal vs Interim Dilapidations is crucial for both landlords and tenants. Here's why:

1. Legal Compliance

Each type of dilapidations is treated differently under UK law, and the legal mechanisms available to landlords and tenants vary accordingly. Interim dilapidations, which arise during the lease term, can give landlords the right to compel repairs under Section 146 of the Law of Property Act 1925. This section allows a landlord to serve a notice requiring the tenant to remedy breaches of covenant, including repair obligations. If the tenant fails to comply, the landlord may be entitled to forfeit the lease.

Under the Landlord and Tenant Act 1927, landlords also have a right to claim damages for breach of repair covenants, although these are usually more relevant at the lease end.

Misidentifying whether a breach is interim or terminal, or mishandling the enforcement process, can significantly weaken a party's legal position, delay resolution, or result in costly disputes, particularly if statutory procedures are not correctly followed.

2. Commercial Strategy

For landlords, interim enforcement can preserve asset value, while terminal claims can help recover costs. For tenants, managing both types proactively reduces risk and cost exposure.

3. Budget Planning

Terminal claims are often substantial. Early awareness enables tenants to plan capital expenditure, commission surveys, and schedule end-of-lease works. Interim obligations can also affect annual maintenance budgets.

4. Dispute Avoidance

Clear differentiation helps both parties set expectations, maintain transparency, and avoid adversarial negotiations.

Terminal vs Interim Dilapidations : Practical Considerations for Tenants

If you’re a commercial tenant, here’s how to stay on top of both interim and terminal dilapidations:

Commission a Schedule of Condition : At lease commencement, record the property’s state to limit liability.

Carry Out Regular Maintenance : Stick to a maintenance programme aligned with lease obligations.

Monitor Lease Terms : Understand your repair, reinstatement, and redecoration covenants.

Engage Early : Begin discussions 12-18 months before lease end to address terminal dilapidations.

Take Professional Advice : Chartered building surveyors can guide you through both interim and terminal obligations.

Terminal vs Interim Dilapidations : Practical Considerations for Landlords

Landlords also benefit from active engagement :

Regular Inspections : Monitor tenant compliance and identify interim breaches early.

Serve Notices Promptly : Don’t wait until lease end to address issues that could worsen over time.

Document Everything : Keep records of inspections, correspondence, and schedules.

Prepare for Terminal Claims Early : A well-prepared terminal schedule avoids delays post-expiry.

Instruct a Dilapidations Surveyor : Ensures robust, protocol-compliant schedules and negotiations.

Terminal vs Interim Dilapidations - Final Thoughts

The debate of Terminal vs Interim Dilapidations is more than academic — it has real-world consequences for lease management, property value, and legal exposure. Landlords and tenants who understand the distinction can manage their responsibilities proactively, avoid disputes, and reduce financial risk.

Whether you are preparing to sign a new lease, managing a portfolio mid-term, or approaching the end of a lease, recognising the difference between Terminal and Interim Dilapidations is essential. With expert advice and a strategic approach, both parties can navigate the complexities of dilapidations with confidence.

Need Help Managing Dilapidations?

Our specialist dilapidations team works with landlords and tenants across the UK to deliver clear, strategic advice on all matters relating to lease-end obligations and property condition.

Whether you're dealing with Terminal or Interim Dilapidations, we’re here to help you stay compliant, reduce exposure, and reach commercially sensible outcomes.

Resources

Dilapidations Blog for further information on a range of Dilapidation topics

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.

Also see our recent article on Understanding Section 18 Valuations.

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 :