When a lease approaches expiry, a landlord will consider the property's condition and whether the tenant is in breach of any of the lease's clauses relating to the property's repair and maintenance.
When dealing with a terminal dilapidations claim, the parties should consider the provisions of the Dilapidations Pre-action Protocol.
This requires the landlord to serve a schedule of dilapidations on the tenant, which is prepared following an inspection of the property by the landlord's surveyor.
The schedule will detail all the works the tenant must undertake to comply with its repair covenants.
At the end of the lease, a quantified demand (supported by invoices or detailed estimates) may also be served, setting out the landlord's likely losses.
If the tenant has not completed all of the work set out in the schedule, the landlord could issue a claim for damages against the tenant based on the quantified demand.
The amount of damages the landlord can recover is limited by the "statutory cap" which our Property Litigation Solicitors explain below.
The standard of repair
The lease is likely to include provisions relating to repair, decoration, yielding up and reinstatement (for example, where the tenant has carried out alterations during the course of the lease and the landlord requires the property to be put back to how it was at the grant of the lease).
These provisions will also dictate the standard of repair, which can sometimes be onerous.
Some leases require a tenant to repair the premises, even if they were not repaired at the commencement of the lease.
Other leases will annex a schedule of conditions, which evidences the state of the premises at the start of the lease – the lease will only require the tenant to keep it in that condition.
A dilapidations claim is limited to repairs of the area demised to the tenant. The landlord cannot include a claim in relation to areas outside of the demise (such as common parts).
Limitation on the level of recoverable damages
The landlord may suffer losses if the tenant has failed to comply with their repair obligations.
These may be costs the landlord is forced to incur in repairing the property or rent lost where the landlord cannot immediately re-let the property due to the condition in which it was left.
These losses crystallise on the expiry of the lease, at which point the landlord has a damages claim against the tenant.
However, that claim is limited by the provisions in s.18 of the Landlord and Tenant Act 1927. This provides that:
- Where the value of the landlord's interest has been reduced due to the tenant's breach, the landlord's claim will be limited to that loss in value (known as the 'diminution in value'). Effectively, the landlord's claim is limited to either the cost of the repairs or the diminution in value of the property due to the repairs.
- To calculate the "diminution in value", a valuation surveyor must complete two hypothetical valuations:
- Valuation 1: The Valuer assumes an auction sale of the property in repair – they identify who will pay the most and the amount the bidder will pay for the property in repair.
- Valuation 2: The Valuer assumes an auction sale of the property in disrepair in which the tenant has left the property and identifies what a bidder would be prepared to pay for the property in that disrepair
- The difference between these two values is the diminution in the value for which the tenant is responsible.
- In a recent case that we have dealt with on behalf of a tenant, the landlord sold its interest in the property during the dilapidation negotiations.
- We could adduce evidence that the sale was at market value, and as such, the landlord had not suffered any loss because of the tenant's breach of the repairing obligations.
- To calculate the "diminution in value", a valuation surveyor must complete two hypothetical valuations:
- The second limb protects a Tenant where the landlord proposes substantially altering or demolishing the premises. Suppose the landlord intends to do work on the property, which would make any repair work undertaken by the tenant a complete waste. In that case, the landlord cannot recover damages for that disrepair.
Further considerations
When considering dilapidations, it is also necessary to consider the leasehold market, trends in the rental market, development, refurbishment or alterations that would enhance the marketability and value of the property.
Landlords should be proactive and produce a schedule of dilapidations early to ensure that tenants make a provision for dilapidations in their accounts.
Contact Our Experts
You can contact our lawyers below if you have any more questions or want more information:
0161 941 4000
More Property Litigation Law News and Advice
TOLATA and Cohabitation Reform: What Could Change for Unmarried Couples?
When relationships break down, or co-owners of a property find themselves in dispute, disagreements often arise about who owns what share of a property, who has the right to live there, or whether the property should be sold. In England and Wales, where parties are unmarried, these disputes are commonly resolved under the Trusts of Land and...
Read Blog
Forfeiture of a Commercial Lease: A Guide For Landlords
Forfeiture can be an effective remedy for landlords, allowing them to regain possession of their property and bring a lease to an end early when a tenant has breached its terms. However, the rules governing forfeiture can be strict and easy to get wrong. If forfeiture is carried out incorrectly, a landlord may become exposed to claims, including...
Read Blog
Renters’ Rights Act 2025: New Grounds for Possession Explained for Landlords
The Renters’ Rights Act 2025 has introduced significant reforms to the private rented sector, most notably the abolition of Section 21 ‘no fault’ evictions. While much commentary has focused on the broader impact of the legislation, landlords are now facing a more immediate and practical question: how can possession of a property be recovered...
Read Blog
What To Do When Your Retail Tenant Goes Bust
Unfortunately, retail insolvencies in England and Wales are rising as tax increases and falling consumer spend push many retail businesses into survival mode, with many more retailers turning to professional advisors for assistance in navigating mounting costs. The latest company insolvency statistics show that retail trade insolvencies were up...
Read Blog
Break Clauses – Avoid the Pitfalls!
Break clauses are contractual provisions in a lease that allow either the landlord or tenant to bring the contractual term of the lease to an end early. On the face of it, a break notice appears to be a straightforward document, and it often looks...
Read Blog
Torts Notice: A Landlord’s Guide
When a tenant vacates a rental property, they sometimes leave behind furniture, personal items, or rubbish. As a landlord, you can’t simply throw everything away immediately. The law treats abandoned goods seriously, and you have certain obligations to avoid claims for loss or damage. Our Property Litigation Lawyers outline the process landlords...
Read Blog
Jennifer Hartley
Senior Associate
Jennifer qualified as a solicitor in January 2020 after completing her training with a specialist real estate firm. She joined Myerson upon qualification and has since become an integral part of the Property Litigation team, applying her expertise to a diverse range of contentious property matters.
Her practice covers a broad spectrum of issues, including TOLATA claims, residential and commercial landlord and tenant disputes, lease renewals, forfeiture, and advising on the right of first refusal. She also regularly advises on lease extensions and enfranchisement matters, guiding individuals and property owners through often complex statutory processes.
About Jennifer Hartley