Context Driven Approaches to Dilapidations Strategy

What is meant by a context driven approach

A context driven approach treats the dilapidations instruction as part of the asset plan rather than as a free-standing technical exercise. The starting point is not the inspection. It is a conversation about what the landlord intends to do with the building, what the relationship with the tenant is worth, and what a good outcome looks like in money and in time.

The breaches set the ceiling of the claim. Context determines how much of that ceiling is worth pursuing, how quickly, and at what cost. The same schedule of dilapidations can support an early commercial settlement, a measured negotiation, or a formal claim with valuation evidence. Choosing between those routes is a commercial judgement, made with the client, before positions harden.

Why a standardised process is not always appropriate

The standard process is familiar. Inspect the property, prepare the schedule, serve it, exchange responses, negotiate, settle. For a routine lease expiry with a solvent tenant and a building going straight back to the market, that process works and there is no reason to depart from it.

The cost of applying it everywhere is real. A full costed schedule on a building about to be demolished produces fees with no recoverable claim behind them. An aggressive opening position against a tenant the landlord hopes will renew can lose a letting worth far more than the claim. A slow, thorough negotiation against a tenant sliding towards insolvency can convert a recoverable settlement into an unsecured debt. The process is a tool. It should not be the strategy.

Understanding the objectives of the landlord before commencing

The briefing conversation should happen before the inspection is booked. The questions are short and the answers change the shape of the instruction.

• What is the plan for the building after expiry — re-letting, refurbishment, redevelopment or sale?
• Does the tenant occupy other properties within the portfolio, or is a renewal under discussion?
• How strong is the tenant covenant, and would a judgment against the tenant actually be paid?
• What is the appetite for a contested negotiation, and over what timescale must the matter conclude?
• Has a dilapidations provision been made in the accounts, and what figure does the asset plan assume?
• Who needs to approve a settlement, and at what thresholds?

The answers feed directly into scope and fees. If the building is to be refurbished, parts of the schedule may be superseded and need not be costed in detail. If the matter must settle before a year-end, the programme is built backwards from that date. If the tenant occupies five other units in the portfolio, the negotiation on this one is conducted with the other five in mind.

Technical entitlement and commercial objectives

Technical entitlement is what the lease and the law allow the landlord to claim. It is capped by the lease wording, by Section 18 of the Landlord and Tenant Act 1927, and by what the landlord actually intends to do with the building. Commercial objectives are what the landlord wants from the situation as a whole. The two overlap. They are not the same thing.

Entitlement defines what can be claimed. Objectives define what should be claimed. A surveyor who pursues the full technical entitlement on every instruction is not maximising value for the client. The recoverable figure after a long negotiation, less the fees spent reaching it, less the cost of the time and the strained relationships, is often lower than a sensible settlement available at the start.

The surveyor as a representative of the landlord

In a dilapidations negotiation, the conduct of the surveyor is read by the tenant as the conduct of the landlord. The Dilapidations Protocol reinforces this. The surveyor endorses the schedule, frames the quantified demand, and sets the tone of the correspondence. A demand that overstates the claim invites a contested response and reflects on the client who served it.

This is why the surveyor should understand the asset management objectives before engaging with the tenant. Once the first letter is sent, the strategy is visible. Repositioning later — from aggressive to conciliatory, or from passive to firm — costs credibility and time. Continuity between the objectives of the landlord and the conduct of the negotiation has to be built in at the start.

The importance of proportionality

Professional fees should bear a sensible relationship to the sums in dispute. On a claim worth £20,000, a full costed schedule, a diminution valuation and months of correspondence can consume a large share of the recovery. On a claim worth £500,000, the same expenditure is modest and may be essential. The Dilapidations Protocol expects proportionate conduct from both sides, and the courts take the same view on costs.

Proportionality also applies to evidence. Valuation advice on diminution is a significant cost and is justified where the claim is large or supersession is in play. On a small claim it is rarely warranted. The guide to dilapidation costs sets out the typical fee components in more detail.

Practical examples

The scenarios below recur across commercial portfolios. In each pair, the breaches could be identical. The strategy is not.

Maximising a claim versus achieving the right outcome

The maximum claim is a number on a schedule. The outcome is what the landlord actually banks, net of fees, after the time the matter took and after any damage to lettings, renewals or other negotiations. The two are routinely confused, and the confusion is expensive.

A commercial settlement reached early keeps fees low, releases the property and the management time, and preserves relationships that have value elsewhere in the portfolio. A maximised claim pursued to the end can deliver a higher headline figure and a worse result. The job of the surveyor acting for the landlord is to tell the client which of those situations they are in before the money is spent, not after. The wider guide to dilapidations claims covers the formal process this judgement sits within.

Conclusion

The condition of the property is established by inspection. The right strategy is established by context. A surveyor who understands the plan for the building, the tenant relationship, the covenant strength and the timescale can shape an instruction that serves the asset plan. A surveyor who knows only the breaches can produce a schedule, and nothing more. Successful dilapidations instructions depend as much on understanding the context of the instruction as on understanding the physical condition of the building. Landlords appointing across whole portfolios should also see the companion article on managing dilapidations across a commercial portfolio.