What Are Dilapidations? What Commercial Tenants Need to Know
In short
Dilapidations are the breaches of a commercial lease's repair, decoration and reinstatement obligations, and the landlord's claim to have them put right. Near the end of a lease, the landlord usually serves a schedule of dilapidations listing the work required. Tenants can carry out the work or negotiate a financial settlement.
Dilapidations are one of the biggest hidden costs of a commercial lease. When a tenant leaves, the landlord expects the premises back in the condition the lease requires. Anything that falls short, whether disrepair, missing redecoration or alterations that were never removed, can become a claim. Understanding your obligations early gives you far more control over the cost.
What a dilapidations claim covers
- Repair: putting right damage and wear covered by the repairing covenant, from ceilings and flooring to building services.
- Reinstatement: removing alterations, such as partitions, kitchens or cabling, and returning the space to its original layout if the lease requires it.
- Redecoration: decorating at the intervals and to the standard set out in the lease.
- Statutory compliance: work needed to meet legislation, where the lease places that duty on the tenant.
How the process works
- Schedule of dilapidations: the landlord’s surveyor lists the breaches, often with costed work. It may be served during the lease (interim) or at or near the end (terminal).
- Response: the tenant’s surveyor reviews each item against the lease and the actual condition.
- Negotiation: most claims are settled through negotiation, following the Dilapidations Protocol, which sets out the expected steps before court action.
- Works or settlement: the tenant either carries out the work before the lease ends or agrees a payment instead.
The legal cap
Under Section 18 of the Landlord and Tenant Act 1927, damages for disrepair cannot exceed the reduction in the value of the landlord’s interest caused by the disrepair. If the landlord plans to redevelop or refurbish anyway, the real loss may be far lower than the cost of the listed work. Specialist advice on this point can make a significant difference.
Reducing your liability
- Agree a photographic schedule of condition at the start of the lease.
- Keep records of every alteration and the licence that approved it.
- Plan your fit out with reinstatement in mind.
- Maintain the premises during the lease rather than leaving it to the end.
- Start planning 12 to 18 months before the lease ends, so carrying out the work yourself is still an option.
Doing the work versus paying
Carrying out the work yourself, with a contractor, is often cheaper than paying the landlord’s estimate, but it must be complete and to the lease standard before the lease ends. That needs good planning and a reliable programme.
How we handle dilapidations work at London’s Prestige
We carry out dilapidations and reinstatement works for commercial tenants and landlords across London, working to the agreed schedule and your surveyor’s instructions. We programme the work around the lease end date, keep a full photographic record of completion, and report progress so there are no surprises at handback. See our commercial refurbishment service, and book a site visit to review your schedule with us.
Common questions
When is a schedule of dilapidations served?
Usually in the last months of the lease or shortly after it ends. An interim schedule can be served during the lease if the lease allows it.
Do I have to carry out the work or can I pay?
Either can apply. Many tenants carry out the work before the lease ends; others negotiate a financial settlement. Your surveyor can advise which is better value.
Can a landlord claim for work they will never do?
The claim for disrepair is capped at the loss in value of the landlord's interest. If the landlord plans to redevelop, that loss may be much lower than the cost of the work listed.