A dilapidations claim is a claim made by a commercial landlord against a tenant for failing to comply with the repair, maintenance, reinstatement, or decoration obligations set out in a lease.
Most dilapidations claims arise when a commercial lease comes to an end. However, they can also occur during the lease term if the property has fallen into significant disrepair.
The purpose of a dilapidations claim is to compensate the landlord for the cost of putting the property back into the condition required by the lease.
What Does a Dilapidations Claim Cover?
The exact obligations will depend on the wording of the lease, but a dilapidations claim commonly includes:
- Repairs to damaged parts of the building
- Internal and external redecoration
- Removal of tenant alterations
- Reinstatement of the property to its original condition
- Maintenance issues that have not been addressed
- Compliance with specific lease obligations
For example, a tenant may have installed partition walls, suspended ceilings, or specialist equipment during their occupation. If the lease requires these alterations to be removed at the end of the tenancy, failing to do so may form part of a dilapidations claim.
When Does a Dilapidations Claim Arise?
A dilapidations claim most commonly arises in one of three situations:
At Lease Expiry
This is the most common scenario. Once the lease ends, the landlord will inspect the property and assess whether the tenant has complied with their lease obligations.
If breaches are identified, the landlord may serve a Schedule of Dilapidations detailing the alleged defects and the estimated cost of remedial works.
During the Lease Term
Some leases allow landlords to take action before the lease expires if repair obligations are not being met.
These are often referred to as interim dilapidations claims.
Following Lease Break Clauses
If a tenant exercises a break clause to end the lease early, the landlord may review the property’s condition before agreeing that the lease has been successfully terminated.
In some cases, repair obligations must be satisfied before the break can take effect.
What Is a Schedule of Dilapidations and How Should a Tenant Respond?
A Schedule of Dilapidations is a formal document prepared by or on behalf of a landlord that sets out alleged breaches of a commercial lease. It is typically served towards the end of a lease term, although it can sometimes be issued during the tenancy if the property has fallen into disrepair.
The purpose of the schedule is to identify areas where the landlord believes the tenant has failed to comply with their lease obligations and to quantify the cost of putting those issues right.
A Schedule of Dilapidations will usually include:
- Details of the alleged defects or disrepair
- References to the relevant lease clauses
- Recommended remedial works
- Estimated repair or reinstatement costs
- Supporting photographs or surveyor observations
Receiving a Schedule of Dilapidations does not automatically mean the tenant must accept the claim or pay the amount being demanded. Tenants should carefully review the document alongside the lease and seek professional advice from a solicitor and surveyor experienced in dilapidations matters.
The first step is to assess whether the alleged breaches are valid and whether the proposed works are actually required under the terms of the lease. In many cases, there may be scope to challenge parts of the claim, particularly where repair costs appear excessive or the landlord’s actual financial loss is lower than the amount claimed.
The tenant will normally prepare a formal response, often called a Scott Schedule or dilapidations response, addressing each item raised by the landlord. This can form the basis for negotiations between the parties and often leads to a settlement without the need for court proceedings.
Responding promptly and obtaining expert advice early can help tenants protect their position, minimise potential liabilities, and reach a more favourable outcome. This is particularly important where significant repair costs or business premises are involved.
Can a Tenant Challenge a Dilapidations Claim?
Yes.
Landlords cannot simply recover whatever costs they choose. A tenant may dispute:
- Whether a breach has occurred
- The scope of the proposed works
- The estimated cost of repairs
- Whether the landlord has suffered a financial loss
In England and Wales, the amount recoverable may also be limited by Section 18(1) of the Landlord and Tenant Act 1927, which can restrict claims where the landlord’s actual loss is lower than the cost of the repairs.
How Are Dilapidations Claims Resolved?
Many dilapidations disputes are settled through negotiation between surveyors and dilapidations lawyers without the need for court proceedings.
The process often involves:
- Inspection of the property
- Service of a Schedule of Dilapidations
- Tenant response
- Negotiation of liability and costs
- Settlement or, if necessary, litigation
Early legal and surveying advice can often help both parties avoid unnecessary costs and reach a practical resolution.
Key Takeaway
A dilapidations claim is a commercial property claim arising when a tenant fails to meet their obligations under a lease.
It most commonly occurs at the end of a tenancy and can involve repair works, reinstatement obligations, decoration requirements, and other breaches of lease terms.
Whether you are a landlord seeking compensation or a tenant facing a claim, obtaining professional advice from a dilapidations lawyer can help you understand your position, minimise risk, and achieve the best possible outcome.