Dilapidation Works

Dilapidation works are the physical repairs, reinstatement, and redecoration that a tenant is required to carry out — or pay for — under the repairing covenants of a commercial lease. They arise when the property has deteriorated beyond the condition the lease requires the tenant to maintain, and they are usually identified through a dilapidation survey or a schedule of dilapidations prepared by a chartered surveyor.

For professional advice on managing a dilapidations claim from either side, see the dilapidations surveyor service.

What Dilapidation Works Typically Include

The scope of dilapidation works depends on the repairing obligations in the lease. In a typical full repairing and insuring lease, the tenant is responsible for keeping the property in repair throughout the term and handing it back in that condition at lease expiry. The works usually fall into three categories:

• Repair— fixing or replacing elements that have deteriorated, such as roof coverings, rainwater goods, windows, floors, and internal finishes.
• Reinstatement— removing tenant alterations and restoring the property to its original layout, where the lease requires this.
• Redecoration— repainting, re-tiling, or re-finishing surfaces to the standard required by the lease, usually to a professional or institutional standard.

The specific items are typically set out in the schedule of dilapidations, which lists each breach, describes the repair required, and estimates the cost of remedying it.

Who Carries Out Dilapidation Works

In most cases, the landlord's surveyor identifies the works and the tenant decides whether to carry them out before lease expiry or negotiate a financial settlement instead. If the tenant carries out the works, they will usually appoint their own contractors, but the landlord may require approval of the specification and workmanship. If the works are not done before the lease ends, the landlord may carry them out and seek to recover the cost from the tenant as a dilapidations claim.

Dilapidation Works vs Payment in Lieu

Not all dilapidations claims result in physical works being carried out. In many cases, the parties agree a financial settlement — sometimes called a payment in lieu of repairs — where the tenant pays an agreed sum and the landlord takes responsibility for the works, or decides not to carry them out at all.

This is particularly common where the landlord intends to refurbish or redevelop the property after the tenant leaves. In those circumstances,section 18 of the Landlord and Tenant Act 1927 may cap the tenant's liability, because the landlord cannot recover more than the actual diminution in the value of the reversion caused by the tenant's breaches.

Jervis v Harris Clauses

Some leases contain a Jervis v Harris clause, which gives the landlord the right to enter the property and carry out repair works during the lease term if the tenant fails to comply with a notice to repair. The landlord can then recover the cost of those works as a debt, rather than as damages. This route bypasses the usual dilapidations process and the protections that section 18 would otherwise provide to the tenant.

How a Surveyor Helps

A chartered building surveyor can advise on the scope and cost of dilapidation works, negotiate the specification, challenge items that are over-claimed, and help agree a settlement that reflects the actual condition of the property. For tenants, early advice — well before the lease expires — usually produces a better outcome than responding to a schedule after the event.

For more on the process and costs involved, see the dilapidation costs guide and the dilapidation report guide.