Harper James advises businesses on commercial property matters under the laws of England and Wales, including lease obligations relating to dilapidations. Commercial dilapidations are breaches of a tenant’s obligations to repair, maintain, reinstate or decorate premises under a lease.
A dilapidations claim usually arises when a tenant has failed to comply with the repairing covenant, has altered the premises without restoring them, or has removed fixtures and fittings that the lease requires it to leave. The lease is the starting point. The relevant clauses, plans, schedules of condition, licences for alterations and photographic evidence determine the tenant’s obligations.
Landlords often commission a schedule of dilapidations during the lease term or after the tenant leaves. The schedule identifies each alleged breach, specifies the work required and provides an estimated cost. Tenants should compare it with the lease and the condition of the premises at the start of the term. A schedule of condition can limit repairing obligations where the lease incorporates it.
A tenant should review dilapidations well before lease expiry. A practical review covers repair obligations, reinstatement requirements, decoration, removal of alterations, access arrangements and any break clause conditions. The tenant can then obtain a surveyor’s assessment, identify work that is genuinely required and decide whether to complete the work or negotiate a financial settlement.
The parties often negotiate by reference to the cost of works, the landlord’s intentions for the property and the effect of the alleged breach on its value. Section 18(1) of the Landlord and Tenant Act 1927 limits damages for certain repair breaches to the reduction in the property’s value caused by the breach. It also prevents recovery where the premises are to be demolished or substantially altered in a way that makes the repairs unnecessary, subject to the evidence and the circumstances of the case.
A settlement should state which breaches are resolved, the amount payable, any works to be completed and whether the agreement provides a full and final resolution. Tenants should retain the lease, condition reports, licences, contractor invoices, photographs and correspondence. Landlords should keep evidence of the property’s condition, proposed works, quotations and any redevelopment plans. Early technical and legal review helps separate valid lease obligations from disputed or unnecessary items and supports a clear negotiation position.