Terminal Schedule of Dilapidations

When a terminal schedule is served

A terminal schedule can only be served at or after the expiry of the lease. Most landlords inspect in the final months of the term and have the schedule ready for service shortly after the tenant vacates. Delay does not extinguish the claim, but it weakens evidence, reduces credibility, and narrows the room to negotiate sensibly.

In practice, earlier action on both sides usually produces better outcomes. A landlord who inspects too late often loses the ability to record the condition before the tenant strips out, and a tenant who waits for service to react often finds they have run out of options to carry out works or plan a settlement strategy.

What a terminal schedule usually contains

A terminal schedule is typically set out as a table or structured document. It should be organised clearly enough that the other side can understand what is being alleged, why it is said to be a breach, and how the item links back to the lease.

• Each alleged breach, by element or location, with a clear description.
• Reference to the specific lease clause said to have been breached.
• The works required to remedy the alleged breach, described proportionately.
• An estimated cost for each item, forming part of the landlord's quantified demand.
• Supporting notes or photographs where factual detail is needed.
• A structure grouped by building element — structure, roof, windows, internal finishes, decoration, services, yielding up.

Terminal vs interim schedules

The key difference is timing, but the legal and commercial effect of that difference is substantial.

Some landlords serve an interim schedule several years before expiry to give the tenant time to budget and plan. Others wait until the final year, which usually produces a larger and more contentious terminal claim.

The Dilapidations Protocol

The Dilapidations Protocol is a pre-action protocol published by the Ministry of Justice and forming part of the Civil Procedure Rules. It governs how terminal dilapidations claims should be handled before any court proceedings are issued. It is not an RICS document, though surveyors on both sides are expected to follow it.

Following the protocol is not compulsory, but courts expect it. A party whose conduct departs unreasonably from the protocol can face an adverse costs order in subsequent proceedings — even where they win on the underlying claim. In practice, that means failure to engage with the protocol inflates the real cost of the dispute, and can tip the economics of a case against an otherwise successful party.

How tenants should prepare

A tenant who only starts thinking about terminal dilapidations when the schedule lands has almost always left it too late. The earlier the exposure is understood, the more options remain.

• Identify the likely dilapidations exposure 12 to 18 months before lease expiry by commissioning a dilapidations report from a chartered building surveyor.
• Review the lease, any schedule of condition, and licences to alter before any inspection.
• Decide early whether to carry out the works in the final months or to settle financially.
• Instruct a dilapidations surveyor on the tenant side to test the landlord’s schedule line by line.
• Budget for both the works and the professional fees involved in defending the claim.

How landlords should prepare

A strong landlord-side terminal claim is not the broadest one. It is the one that survives scrutiny once the tenant's surveyor has read the lease and inspected the property.

• Book the inspection to take place while the tenant is still in occupation where possible.
• Confirm the future use of the building before finalising the schedule, because intended works affect recoverable loss.
• Pair the schedule with a quantified demand tied to realistic costs, not wish-list refurbishment figures.
• Serve the schedule promptly after lease expiry so the evidence is fresh and the claim credible.
• Keep a clear audit trail of inspections, photographs and correspondence.

Damages, Section 18 and supersession

The schedule total is rarely the recoverable loss. Two concepts in particular reshape the final figure:

Section 18 of the Landlord and Tenant Act 1927 caps recovery to the diminution in value of the landlord's reversion. Where the property is being demolished or substantially refurbished, the cap can reduce — or in extreme cases eliminate — the claim.

Supersession applies where the landlord's intended works make certain tenant items valueless in practice. Items that would have been stripped out, over-clad or replaced as part of the landlord's plans typically cannot be recovered as dilapidations.

Common mistakes on both sides

• Treating the schedule total as the amount the tenant must pay, rather than an opening position.
• Ignoring Section 18 and diminution in value arguments, especially where redevelopment is in view.
• Leaving the inspection too late, so the tenant has already stripped out or vacated with no notice.
• Serving a schedule without a quantified demand, leaving the tenant no meaningful number to respond to.
• Forgetting to cross-check licences to alter when making reinstatement demands.