Can I negotiate a dilapidations claim down?

Almost always. Challenging scope, specification, betterment, supersession and the Section 18 cap typically produces a settlement well below the served figure.

Should I do the works or pay damages?

Compare the cost of doing the works properly during your own occupation with the landlord's likely damages after the Section 18 cap. In many cases neither the full works nor the full claim is the right answer.

Is the landlord's schedule usually accurate?

Rarely as served. Schedules routinely include betterment, items outside the demise, superseded works and costings well above market rates. Most settle materially below the served figure.

What is the section 18 cap?

Damages cannot exceed the diminution in the value of the landlord's reversion caused by the breaches. Where the property is to be refurbished or redeveloped, that cap can reduce the claim substantially.

Should I do the works myself before leaving?

Sometimes — but only after comparing the cost of doing them with the likely settlement. Where the landlord intends to strip the unit out, spending on reinstatement can be wasted money.

When should I get advice?

Twelve to eighteen months before lease end, so the exposure is budgeted and works or negotiation can be planned rather than rushed.

Commercial Dilapidations Surveyor

A terminal dilapidations schedule is an opening claim, not a bill. Landlords' schedules routinely include betterment, works the landlord never intends to carry out, and items outside the repairing covenant. Most settle for a fraction of the figure served.

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What the claim can properly include

Only breaches of the covenants to repair, decorate, reinstate and yield up — measured against the standard the lease actually imposes, and against any schedule of condition attached to it. Age, character and locality of the premises all bear on that standard.

The two caps on a claim

First, the common law measure: the landlord's actual loss. Second, the statutory cap in Section 18(1) of the Landlord and Tenant Act 1927 — damages cannot exceed the diminution in the value of the landlord's reversion, and nothing is recoverable where the premises are to be demolished or structurally altered.

Following the Protocol

The Dilapidations Protocol requires a properly endorsed schedule, a quantified demand and a reasoned tenant response, with both surveyors endorsing that the claim reflects the landlord's genuine loss. Protocol non-compliance is a real lever in negotiation and in costs.

Common questions

Can I negotiate a dilapidations claim down?: Almost always. Challenging scope, specification, betterment, supersession and the Section 18 cap typically produces a settlement well below the served figure.
Should I do the works or pay damages?: Compare the cost of doing the works properly during your own occupation with the landlord's likely damages after the Section 18 cap. In many cases neither the full works nor the full claim is the right answer.
Is the landlord's schedule usually accurate?: Rarely as served. Schedules routinely include betterment, items outside the demise, superseded works and costings well above market rates. Most settle materially below the served figure.
What is the section 18 cap?: Damages cannot exceed the diminution in the value of the landlord's reversion caused by the breaches. Where the property is to be refurbished or redeveloped, that cap can reduce the claim substantially.
Should I do the works myself before leaving?: Sometimes — but only after comparing the cost of doing them with the likely settlement. Where the landlord intends to strip the unit out, spending on reinstatement can be wasted money.
When should I get advice?: Twelve to eighteen months before lease end, so the exposure is budgeted and works or negotiation can be planned rather than rushed.

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Chris McGarrigle MRICS, chartered since 1989, acting for occupiers across England, Scotland, Northern Ireland and Ireland.

chris@mcgarrigle.com

Related guides

Section 18 Valuation
Section 18(1) of the Landlord and Tenant Act 1927 caps dilapidations damages at the diminution in the value of the reversion. How the valuation works.
Commercial Lease Expiry
What to do before a commercial lease expires: renewal rights, break notices, dilapidations exposure, reinstatement and exit planning.
Commercial Property Expert Witness
Expert witness on commercial property: rent, lease renewal, dilapidations and compensation. MRICS, MCIArb, senior lecturer and MSc Real Estate course leader.