Dilapidations Claims: Landlord's Guide

Dilapidations is where you either claw back a serious chunk of value at lease end or leave money on the table. It is also where a lot of forum advice is half-baked or flat wrong.

1. What dilapidations actually are

For a commercial lease, "dilapidations" is just your tenant's repair, reinstatement and redecoration obligations under the lease, priced up as a claim if they do not do the work.

In practice you are looking at three buckets:

Repair: bringing the premises up to the standard required by the repairing covenant, which might be "good and substantial repair" or, in older leases, "put and keep" in repair.

Reinstatement: removing tenant's alterations where the lease or licence says they must reinstate at the end (partitions, mezzanines, signage).

Decoration: cyclical internal and external decoration clauses (for example every 3 or 5 years, and in the last year of the term).

You enforce these either during the lease (interim dilaps) or at / after lease end (terminal dilaps). The lease wording is the starting point every time.

2. Interim vs terminal dilapidations

Interim dilapidations

You can serve a schedule of dilapidations during the term if the disrepair is serious enough and you want the tenant to fix it or as part of managing a break clause.

Often used:

To push a tenant into doing repairs long before expiry.

To attack a tenant's break notice by arguing they have not complied with break conditions (for example "give up in repair").

Terminal dilapidations

At or shortly after lease end, your building surveyor inspects and prepares a Terminal Schedule of Dilapidations, listing each breach and the cost to remedy.

Under the Dilapidations Protocol (the pre-action protocol for terminal dilapidations under the Civil Procedure Rules), you then send a Quantified Demand to the former tenant.

The tenant has 56 days to serve a Response, usually with their own surveyor's counter-schedule.

Most cases settle at this stage by negotiation rather than going to court. If you ignore the Protocol, the court can hit you on costs later.

Forum mistake: "Just send them a big bill and threaten court." If you do not follow the Protocol and your claim is inflated, judges are very happy to slash your costs and even your damages.

3. Section 18 cap: the legal ceiling on your claim

The key statute is Landlord and Tenant Act 1927 s18(1).

Section 18(1) does two things:

Diminution in value cap

Your damages for breach of the repairing covenant cannot exceed the amount by which the disrepair reduces the value of your reversion (your interest in the property).

In plain English:

Cost of works might be GBP 300,000.

If, with the property in disrepair, it is worth GBP 850,000, and if in full repair it would be worth GBP 1,000,000, the diminution in value is GBP 150,000.

Your maximum damages for repair are GBP 150,000, even if you actually spend GBP 300,000.

Redevelopment / supersession limb

If you genuinely intend to demolish or substantially alter the property so the repairs would be rendered valueless, your recoverable damages for repair can be reduced or capped at nil.

Practical consequences for you:

If you plan a back-to-brick refurb or change of use immediately after lease end, your repair claim may be heavily cut or wiped out on a Section 18 valuation, even though the tenant has clearly breached.

You can still pursue non-repair breaches (for example removal of unwanted alterations, reinstatement) under common law loss principles, but s18 caps repair damages.

Forum myth: "You can always claim the full cost of works." The diminution in value cap is real. Surveyors on both sides will argue about it.

4. The Dilapidations Protocol and Pre-Action Protocol

The Dilapidations Protocol (2016 RICS / Property Litigation Association version, now part of the CPR pre-action regime) sets out how you should conduct a terminal dilaps claim before court:

Key points:

Your claim must be based on a realistic assessment of loss, not a wish-list. The Quantified Demand should not exceed your likely recoverable loss after Section 18.

You should send:

The Schedule of Dilapidations (usually with costings).

A Quantified Demand explaining the total sum claimed and how it is calculated (cost of works, professional fees, loss of rent etc).

Tenant has 56 days to serve a formal Response, item by item, usually using a Scott Schedule format (each party's position side by side).

Both sides are expected to consider ADR (negotiation, mediation) seriously before going to court.

If you later issue proceedings and have ignored the Protocol (or wildly overstated your claim), expect the judge to reflect that in costs orders against you even if you win something.

5. Typical claim sizes and the negotiation process

Typical numbers

Every building is different, but as broad 2025-26 guidance on traditional leases:

Light industrial / simple warehouse:

Terminal claims often in the region of GBP 10-25 per sq ft.

Standard secondary office or high-street retail:

GBP 15-40 per sq ft common.

Older, heavily partitioned offices or pubs / restaurants with lots of specialist fit-out:

Claims can push GBP 30-50+ per sq ft.

These are headline schedules. Settlements after Section 18 arguments, supersession and negotiation are typically 50-70% of the initial claim in many cases.

The usual sequence

Inspection and Schedule

You instruct a building surveyor to inspect and prepare the Schedule at or just before lease end.

Service of Schedule and Quantified Demand

Often done by your solicitor, complying with the Protocol.

Tenant's Response and Counter-Schedule

Tenant's surveyor will:

Challenge obligations (for example "landlord's repair responsibility").

Challenge scope (betterment, unnecessary works).

Challenge rates and preliminaries.

Negotiations

Usually on a without prejudice basis.

Often using a Scott Schedule so each item shows: landlord's cost, tenant's counter-cost / defence, and a "court view" column for compromise.

Part 36 offers and litigation

If you are heading towards court, both sides will think about Part 36 offers (formal settlement offers with costs consequences).

Court will deal with:

Whether each item is a breach.

Reasonable cost of putting right.

Section 18 cap / diminution in value.

Common outcomes:

You do not collect every line item.

You may agree a cash settlement with no obligation on you actually to do the works.

Forum mistake: "If they do not pay my schedule, I will just sue and get it all." Courts are alive to inflated schedules. Section 18 and betterment arguments bite hard.

6. Practical tips to maximise your claim

If you want to get paid rather than just argue, you need to treat dilaps as a planned process, not a last-minute scrap.

Practical steps:

Document condition at lease start

Full photographic schedule of condition (or a full survey) attached to the lease where you agree to limit repairing obligations.

If there is no SoC and the tenant has a full repairing obligation, you are in a stronger position, but expect more disputes about pre-existing disrepair.

Understand the repairing covenant

Know whether the lease is:

FR (full repairing),

IRI (internal only), or

Limited by a schedule of condition.

Do not claim items that are clearly your responsibility. That undermines your credibility.

Carry out interim inspections

Regular inspections during the term mean you can pick up major issues early and, if needed, serve interim or Jervis v Harris schedules to force repairs without waiting for lease end.

Plan around redevelopment

If you are going to redevelop or refit, coordinate with your surveyor and valuation evidence.

Over-specced fit-out plans can be used against you as "supersession" and reduce your recoverable loss.

Use specialists

A good dilaps surveyor can turn a messy list into a robust, evidence-backed claim with realistic costings and a clear position on Section 18.

Typical fees, even on small units, are worth it if your claim is GBP 30,000-200,000+.

7. What forums get wrong about dilapidations

The big myths you should kill in your PropertyKiln guide:

"You can always bill the tenant for the full refurb."

Section 18 caps repair damages at the diminution in value of your interest. If your works go beyond like-for-like repair (betterment), or if you are redeveloping, a big chunk of your schedule may never be recoverable.

"Just do the works and send them the invoice."

You do not have to do the works to claim, and doing very high-spec works can hand the tenant a betterment / supersession argument. Your recoverable loss is what is reasonable for the lease standard, not what you decided to build afterwards.

"You must sue quickly or lose the right."

Contract limitation is usually 6 years (or 12 years for deeds) from breach, not 3 months. But the Dilapidations Protocol expects you to serve a Schedule and Quantified Demand within about 56 days of lease end if you are serious.

"Any surveyor can knock up a schedule."

Dilaps is niche. A generic building surveyor without experience of Section 18 valuations, supersession, and the Protocol can over-claim and hurt you in negotiation and in court.

If you get this into one strong guide, the core message is:

The lease sets the obligations, Section 18 sets the cap, and the Protocol sets the rules of the game. If you line those up from the day you grant the lease, terminal dilapidations becomes a planned exit, not a last-minute bunfight.

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