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Dilapidations are one of the most significant — and most misunderstood — financial risks in commercial property. Whether you are a landlord preparing to reclaim a property at the end of a lease or a tenant facing an unexpected claim, understanding dilapidations is essential. The term appears throughout commercial leases, yet many property owners and occupiers only discover what it means when a six-figure claim lands on their desk. This guide explains dilapidations in plain language: what they are, how the process works, what they cost, and how to protect your position from day one.
Dilapidations — sometimes referred to as "dilaps" in the industry — are the breaches of a tenant's lease obligations relating to the condition of a commercial property. In practical terms, dilapidations represent the repairs, maintenance, reinstatement, and decoration that a tenant is required to carry out (or pay for) to return the property to the condition specified in the lease.
The word itself simply means a state of disrepair. In a commercial property context, it has a specific legal meaning tied to the covenants — the binding promises — contained within the lease. These covenants typically require the tenant to keep the property in "good and substantial repair and condition," to decorate at specified intervals, and to remove any alterations made during the tenancy.
When a tenant fails to meet these obligations, the landlord is entitled to prepare a claim — known as a schedule of dilapidations — setting out each breach and the estimated cost of remedying it. These claims are a routine part of the commercial property cycle, but they can be complex, contentious, and expensive if not managed properly.
Bemerton Consulting, RICS Chartered Building Surveyors in Liverpool, acts for both landlords and tenants on dilapidations matters across the North West.
Not all dilapidations claims are the same. The type and timing of the claim depends on where the lease sits in its lifecycle.
This is the most common form. A terminal dilapidations claim is served at or shortly after the end of the lease. The landlord's surveyor inspects the property, prepares a schedule of dilapidations listing every breach of the repairing, decorating, and reinstatement covenants, and serves it on the outgoing tenant. The claim sets out the cost of putting the property back into the condition required by the lease.
Under the Dilapidations Protocol endorsed by the Civil Procedure Rules, the landlord should serve the schedule within a reasonable period after lease expiry — typically within 56 days. The tenant then responds, and negotiations follow. If the parties cannot agree, the matter may proceed to alternative dispute resolution or, ultimately, court proceedings.
An interim schedule can be served during the lease term where the tenant is failing to comply with their repairing obligations. This is less common than a terminal claim but can be an important tool for landlords whose properties are deteriorating. The legal framework is different — the landlord must demonstrate that the breach is causing them loss, and the Leasehold Property (Repairs) Act 1938 provides tenants with protections against certain interim claims on longer leases.
A wants of repair notice is a less formal notification, typically served as a precursor to an interim schedule or as a warning to the tenant that specific repairs are required. It is not a formal dilapidations claim but can prompt early engagement and avoid the need for a more confrontational process later.
A schedule of dilapidations typically covers three categories of obligation:
The repairing covenant is the core of most dilapidations claims. It requires the tenant to maintain the structure, fabric, and services of the property in good repair. Common items include roof repairs, window replacements, pointing and brickwork, floor coverings, mechanical and electrical services, and general fabric maintenance. The extent of the obligation depends on the precise wording of the lease — a "full repairing" obligation is broader than a covenant to "keep in repair."
Most commercial leases require the tenant to redecorate the premises at specified intervals — typically every three to five years internally and every five years externally. If the tenant has not complied, the cost of decoration forms part of the claim.
Where the tenant has carried out alterations during the lease — partitioning open-plan space, installing a mezzanine, fitting out a kitchen, or making changes to building services — the reinstatement covenant requires them to remove these alterations and return the property to its original layout. Reinstatement costs can be substantial, particularly for heavily fitted-out premises.
Dilapidations costs vary enormously depending on the size, type, and condition of the property, the length and terms of the lease, and the extent of the tenant's alterations. As a general indication, RICS guidance suggests that dilapidations claims for standard commercial properties typically range from £10 to £40 per square foot, though complex cases can exceed this significantly.
Several factors influence the final settlement figure. The statutory cap under Section 18(1) of the Landlord and Tenant Act 1927 limits the landlord's claim to the lesser of the cost of the works or the diminution in value of the reversion — meaning the landlord cannot claim more than the reduction in the property's value caused by the disrepair. If the landlord intends to demolish or substantially redevelop the property, the claim may be reduced or extinguished entirely under the supersession principle.
A well-prepared dilapidations claim starts long before the lease expires. Landlords should ensure that the lease contains clear, robust repairing covenants and should commission a building survey well in advance of the termination date. Serving the schedule promptly after lease expiry, supported by a detailed quantified demand and a diminution valuation where required, puts the claim on a strong footing.
Appointing a RICS Chartered Building Surveyor to prepare the schedule ensures it is professional, defensible, and compliant with the Dilapidations Protocol. View Bemerton Consulting's landlord dilapidations services.
Tenants should take proactive steps from the very start of a lease. Commissioning a schedule of condition before taking occupation limits future liability by recording the property's existing defects. During the lease, maintaining the property in accordance with the covenants avoids the accumulation of a large terminal liability.
When a dilapidations claim is received, tenants should appoint their own surveyor immediately. A skilled dilapidations surveyor can identify items that are overstated, fall outside the lease obligations, or are subject to statutory protections. Negotiated settlements are the norm — very few dilapidations disputes reach court. View Bemerton Consulting's tenant dilapidations services.
The typical dilapidations process follows a structured sequence. The landlord's surveyor inspects the property and prepares the schedule of dilapidations, supported by a costed schedule of works and, where required, a diminution valuation. The schedule is served on the tenant. The tenant appoints their own surveyor, who prepares a response — known as a Scott Schedule — addressing each item and either accepting, rejecting, or counter-proposing. The parties then enter negotiations, usually conducted between the respective surveyors.
If agreement cannot be reached, the Dilapidations Protocol encourages the use of alternative dispute resolution before litigation. Mediation and expert determination are common. Court proceedings are a last resort but remain available where necessary.
The timeline from lease expiry to settlement typically runs between three and twelve months, depending on complexity and the willingness of both parties to engage constructively. View our dilapidation steps guide for a detailed breakdown of the process.
Dilapidations is a specialist area that sits at the intersection of building surveying, lease law, and valuation. A RICS Chartered Building Surveyor with dilapidations experience understands how to interpret lease covenants, assess building condition, quantify remedial works, and negotiate settlements. Whether you are a landlord seeking to maximise your claim or a tenant looking to minimise your liability, professional advice is essential.
Bemerton Consulting has extensive experience acting on both sides of dilapidations disputes for commercial and residential properties across Liverpool and the North West. Our team of RICS Chartered Building Surveyors provides clear, commercially focused advice at every stage of the process. Contact us to discuss your dilapidations requirements.
Dilapidations refers to the breaches of a tenant's repairing, decorating, and reinstatement obligations under a commercial lease. In practical terms, it is the cost of putting a property back into the condition required by the lease at the end of the tenancy.
Claims for standard commercial properties typically range from £10 to £40 per square foot, though this varies significantly. A small office might see a claim of £5,000 to £15,000, while a large industrial unit or heavily fitted-out premises could face claims of £100,000 or more.
No. Section 18(1) of the Landlord and Tenant Act 1927 caps the landlord's claim at the diminution in value of the reversion — the reduction in the property's value caused by the disrepair. If the landlord intends to demolish or redevelop the property, the claim may be reduced or eliminated.
A schedule of dilapidations is the formal document prepared by the landlord's surveyor setting out each breach of the tenant's lease obligations, together with the estimated cost of remedying it. It is typically served on the tenant at or shortly after the end of the lease.
Most dilapidations disputes are resolved through negotiation within three to twelve months of the lease expiry. The timeline depends on the complexity of the claim, the quality of the evidence, and how quickly both parties engage with the process.
Yes. A schedule of condition is one of the most cost-effective protections available to a commercial tenant. It records the property's condition at lease commencement and limits the tenant's liability to maintaining that standard — preventing claims for pre-existing defects at lease end.
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