Dilapidations

What dilapidations are, in practice

In a typical full repairing and insuring lease, the tenant agrees to keep the premises in a defined condition and to return them in that condition at the end of the term. Dilapidations are the alleged failures to comply with those obligations. The physical defects are one part of the picture; the other part is how the lease interprets them and what remedy the landlord is entitled to.

Dilapidations are not the same as general wear and tear, and they are not the same as a survey defect list. A defect only becomes a dilapidation when it represents a breach of a specific clause in the lease, and the scope of that clause can vary significantly between agreements.

Types of dilapidations

The two main categories turn on when the issue is raised. The terminal schedule of dilapidations is by far the more common.

The obligations that create liability

Dilapidations arise from breaches of specific lease clauses, not from a general sense that the building could look better. The clauses that do the heavy lifting are usually:

• Repair — keeping the fabric, finishes and services in the condition required by the lease.
• Reinstatement — removing tenant alterations and putting the premises back to the original layout where required.
• Redecoration — painting, finishing and periodic decoration to the standard in the lease.
• Yielding up — returning the premises clear of chattels, with keys and in the condition required at lease end.
• Compliance — meeting statutory and regulatory requirements that the lease places on the tenant.

Where a schedule of condition is incorporated into the lease, the standard of repair is usually limited to the condition at lease commencement. That can dramatically change the shape of any subsequent claim.

The landlord perspective

For a landlord, dilapidations are about protecting the investment value of the reversion and ensuring the premises can be relet or redeveloped without unexpected costs. The strongest landlord claims are the ones that survive scrutiny once the tenant's surveyor has read the lease and inspected the building.

• Protecting the value of the reversion across the term, not only at lease end.
• Using interim schedules to press for compliance during the lease where appropriate.
• Commissioning a disciplined inspection before serving any terminal schedule.
• Quantifying the demand on a realistic basis, not a wish-list refurbishment.
• Engaging with the Dilapidations Protocol so costs are not inflated by procedural criticism.

The tenant perspective

For a tenant, dilapidations are about understanding exposure early enough to have meaningful options. The more time a tenant has, the more leverage they retain — to carry out works themselves, to negotiate a settlement, or to structure an exit strategy.

• Reading the lease carefully — especially the repair, decoration, reinstatement and yielding-up clauses.
• Identifying whether a schedule of condition limits the standard of repair required.
• Commissioning an independent view of exposure 12 to 18 months before expiry.
• Deciding early whether to carry out works or settle, based on evidence rather than assumption.
• Keeping records of licences to alter, consents, and any correspondence with the landlord.

The role of the chartered surveyor

A chartered building surveyor sits at the centre of any serious dilapidations matter. On the landlord side, the surveyor prepares the schedule, supports the quantified demand, and negotiates settlement. On the tenant side, the surveyor tests each line of the schedule, raises Section 18 and supersession where appropriate, and helps decide between works and settlement.

Both sides operate within the RICS professional framework and the Dilapidations Protocol. For an overview of how a survey and report fit together, see the dilapidation survey and dilapidation report guides.

Common pitfalls

• Assuming the schedule total is the amount payable — it is the landlord’s opening position only.
• Leaving the first conversation until the schedule arrives, when options have already narrowed.
• Confusing fair wear and tear with breach of covenant — the two are not the same.
• Ignoring Section 18 where redevelopment or a change of use is in view.
• Failing to cross-check reinstatement against the licences to alter actually granted.