Commercial Dilapidations Surveyor for Tenants

Advice before lease expiry

The cheapest dilapidations advice is the advice taken before the lease ends. Once the landlord's schedule arrives, the terms of the argument have already been set by someone else; before expiry you still control the sequence, the specification and the timing of any works.

Taken early, the exercise is straightforward: read the repairing, decorating, reinstatement and yielding-up covenants, inspect the premises against them, and price the realistic exposure. That figure tells you whether to carry out works during your own occupation at your own contractor's rates, negotiate a cash settlement, or plan for a Section 18 argument.

• An exit budget you can provision for, rather than a surprise claim after you have left
• Time to complete works at your own cost and programme, which is nearly always cheaper than damages
• Evidence of the premises' condition at expiry, before the landlord's own works muddy the picture
• Room to trade dilapidations against renewal terms where you are staying elsewhere in the landlord's estate

The schedule of dilapidations

A schedule lists the alleged breaches item by item, with the works the landlord says are needed. An interim schedule is served during the term; a terminal schedule at or near expiry. Either way, each item has to be tied back to an actual covenant in your lease and measured against the standard that lease imposes, taking account of the age, character and locality of the premises and any schedule of condition attached at the outset.

Four separate obligations get bundled together and need separating: repair — putting right disrepair, not improving the building; reinstatement — removing tenant alterations where the lease or the licence requires it; redecoration — often tied to a stated frequency and to the final year of the term; and yielding up — the state and condition in which the premises must be handed back, including fittings, keys, statutory documentation and clearance.

The tenant response is where value is won. It goes through the schedule line by line, admitting what is genuinely due, rejecting what is not, and answering scope, specification, rates and the landlord's intentions. A bare denial achieves nothing; a costed, evidenced response changes the number.

• Repair — the covenant's standard, not the landlord's preferred standard
• Reinstatement — only where required, and only alterations actually installed by you
• Redecoration — frequency, extent and whether the season and specification are reasonable
• Yielding up — clearance, fittings, services documentation and handover condition
• Landlord's schedule — endorsement, costings and the surveyor's basis of claim
• Tenant response — item by item, with alternative costings and photographic evidence

The quantified demand

The Protocol requires the landlord to put a money figure on the claim in a quantified demand: the cost of the works, plus loss of rent and service charge for the period the works would take, plus professional fees and, sometimes, VAT. Each of those heads is arguable.

Costs are usually taken from the landlord's surveyor's own rates rather than a competitive tender, and frequently assume a full specification where a repair would do. Loss of rent is only recoverable for a realistic works period, and not at all where the unit would have stood empty anyway or where the incoming tenant takes it in its actual condition. Fees follow the claim: cut the claim and the fees fall with it.

Section 18 valuation and diminution

Section 18(1) of the Landlord and Tenant Act 1927 is the single most powerful tenant argument in dilapidations, and the reason the cost of works is not the same thing as the landlord's recoverable loss. Damages for breach of a repairing covenant cannot exceed the diminution in the value of the landlord's reversion caused by the breach — the difference between what the interest is worth in repair and what it is worth in its actual condition at lease end.

Where a purchaser or incoming occupier would strip out and refit regardless, that difference can be a small fraction of the schedule, and occasionally nil. The second limb goes further: nothing is recoverable at all where the premises are to be demolished, or structurally altered so extensively that the repairs would be valueless.

A Section 18 valuation is worth commissioning where the claim is substantial, the building dated or the location weak, or where there is any sign of redevelopment. The detail of how the two valuations are constructed is set out in the Section 18 guide.

The Dilapidations Protocol

The Pre-Action Protocol for Claims for Damages in Relation to the Physical State of Commercial Property sits behind every terminal claim in England and Wales. It sets the timetable — schedule and quantified demand served promptly after expiry, a reasoned tenant response, then a meeting between the surveyors — and it requires both surveyors to endorse that the claim, and the response, reflect a genuine assessment rather than a negotiating position.

Protocol compliance is not a formality. An unendorsed schedule, an inflated quantified demand or a refusal to engage with the tenant's response are all real levers, on the number and on costs, if the matter ever goes further.

The Scott Schedule

Where items remain in dispute the argument is organised into a Scott Schedule: the landlord's item, cost and basis in one set of columns, the tenant's response and figure alongside, and a final column left for the tribunal or the agreed settlement. It is the format that forces both sides to be specific.

In practice most claims collapse in the Scott Schedule stage, because each disputed line has to be justified on its own terms — covenant, breach, remedy, cost — and a great many cannot be.

Supersession

Where the landlord's own intended works supersede the tenant's obligations, those items drop out of the claim. A full refurbishment, a change of use, a reconfiguration or a redevelopment all remove the loss the repair was supposed to make good.

Establishing the landlord's actual intentions — through marketing particulars, planning applications, contractor instructions and what has in fact happened to the building since you left — is often the single most valuable piece of work on a dilapidations file.

Tenant strategy, step by step

The same sequence works on nearly every claim, whether the schedule is for five thousand pounds or five hundred thousand.

• Lease review — repair, decoration, reinstatement and yielding-up covenants, licences for alterations, any schedule of condition
• Inspection — recorded and photographed against the covenants, before the landlord's works begin
• Assessment — a realistic tenant costing of what is genuinely due
• Landlord's schedule and quantified demand — analysed item by item
• Section 18 analysis — diminution valuation and supersession where the claim justifies it
• Negotiation — surveyor to surveyor, under the Protocol, on evidence rather than assertion
• Settlement — documented, with a full and final release of the claim