BBC - Blackmore Building Consultancy Ltd

About dilapidations?

Dilapidations is often described as a 'dark art' with landlord claims broadly averaging the final years rent. Claims can vary between £25 and £75 sq ft with settlements heavily dependent on timing, market conditions, lease obligations, intentions of parties and the strategies and expertise of the negotiators

UK Commercial leases normally require tenants to put the property in good repair at the start of the lease term, maintain it in good repair during the term and hand it back at lease end repaired, redecorated and with the tenant’s alterations removed. Where the tenant doesn’t comply with their lease terms landlords are able to enforce their rights by serving:

  • ‘Repair Notices’ - served midterm, they allow the landlord to carry out repair works in the tenant’s default and at the tenant’s cost during the lease term.
  • ‘Interim schedules of dilapidations’ served midterm, they allow the landlord to claim compensation (or lease forfeiture) via the courts if the tenant hasn’t completed a schedule of works served on the tenant (the law allows the tenant certain specific rights), and;
  • ‘Terminal schedule of dilapidations’ served at lease end, the schedule lists the works the landlord feels need to be completed after lease end and helps the landlord to claim their costs back via the courts if the tenant decides not to attempt them before lease end.

  • UK based dilapidations claims are governed by case law and statute and have been fought over for hundreds of years. Almost every word or phrase in a lease document has been defined in a legal case at some point or another.

    When the additional heads of claim such as loss of rent, fees, VAT are added to the final version of the landlord’s terminal claim that often more than double the overall claim. As illustration here are some recent average landlord claims and negotiated settlements (sample size 174 recent instructions)



    Industrial/retail sheds:

    Average Claim

    £25.47 sq ft

    £13.82 sq ft

    Average Settlement

    £10.81 sq ft

    £8.15 sq ft

    Tenants normally prefer to reach an early cash settlement rather than attempt the works and are able to argue against a landlord’s claim on any number levels, including that:

  • The landlord’s works and costs are unreasonable;
  • The lease doesn’t oblige the tenant to carry out certain works; and
  • The landlord plans to carry out a redevelopment or set of improvements that render the repairs ‘valueless’