Section 18 Valuation
Section 18(1) of the Landlord and Tenant Act 1927 does two things. Its first limb caps damages for disrepair at the diminution in value of the landlord's reversion caused by the breach. Its second limb bars recovery entirely where the premises are to be demolished or so structurally altered that the repairs would be valueless.
How the diminution is measured
Two valuations of the landlord's interest at lease end: one in the condition the premises should have been in had the covenants been performed, one in their actual condition. The difference is the cap. Where a purchaser would not discount for the disrepair — because the incoming occupier would strip out anyway — the diminution can be far less than the cost of works, and sometimes nil.
Supersession
Where the landlord's own works supersede the tenant's repairing obligations — a full refurbishment, a change of use, a reconfiguration — those items drop out of the claim. Establishing the landlord's actual intentions, through marketing evidence, planning applications and contractor instructions, is often the single most valuable piece of work on a dilapidations file.
When to run the argument
A Section 18 valuation is worth commissioning where the claim is substantial, where the building is dated or the location weak, or where there is any sign of redevelopment. It is not needed on every schedule, and I will say when it is not.
Common questions
- Does Section 18 apply in Scotland?
- No. The 1927 Act applies to England and Wales; Scottish dilapidations follow different principles, and I advise on the correct basis for the jurisdiction.
- Who pays for the Section 18 valuation?
- The tenant commissions its own, but the saving usually far exceeds the fee where the claim is large.
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Chris McGarrigle MRICS, chartered since 1989, acting for occupiers across England, Scotland, Northern Ireland and Ireland.
chris@mcgarrigle.comRelated guides
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