The Complete Tenant Dilapidations Guide

If you only read one tenant dilapidations guide before lease-end, make it this one. This in-depth article explains what dilapidations are, how claims are built, the legal caps that protect tenants, and the practical steps to cut risk and cost. This tenant dilapidations guide is written for UK commercial tenants (England & Wales) in plain English with a clear, action-led structure you can follow.

Tenant Dilapidations Guide - At a glance

What “dilapidations” actually means and where liability comes from.

How landlords build claims (repair, decoration, reinstatement, and statutory compliance).

Your strongest defences: Section 18(1) cap, “supersession”, betterment, and scope challenges.

How the Dilapidations Protocol works and what to do at each stage.

Break-clause traps and “yield up” obligations most tenants miss.

How to negotiate a fair settlement (and when to do the works instead).

Checklists and timelines you can use immediately.

1) What are commercial dilapidations?

“Dilapidations” are the alleged lease breaches a landlord says you must remedy—usually at or near the end of your lease. They arise from covenants in your lease: to repair, decorate, comply with statute, and often to reinstate any alterations. If you don’t do the works, the landlord can seek damages, typically measured by the reasonable cost of those works and (sometimes) associated losses like rent during the works - subject to strict legal limits that protect tenants.

Key point: Liability is contractual. What your lease says - and any Schedule of Condition it incorporates - sets your starting position.
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2) The main categories in a dilapidations claim

Most terminal Schedules of Dilapidations group items under four headings:

Repair – fabric defects: roof leaks, spalled brickwork, cracked glazing, damaged floor screed, etc.

Decoration – internal/external redecorations by a set interval or at lease expiry.

Statutory compliance – e.g., ensuring electrical safety or fire precautions meet standards required by the lease.

Reinstatement – removing tenant alterations and putting the premises back to the pre-alteration state if the lease requires it (often only if the landlord served a reinstatement notice on time).

Each item will be described, costed, and sometimes evidenced by photos or test reports. The landlord may add “other heads of claim”: e.g., rent during the works period, service charge shortfall, rates, professional fees. These are not automatic; they must be causally linked, reasonable, and mitigated.

3) The legal safety net for tenants

a) The Section 18(1) Cap (Landlord and Tenant Act 1927)

Damages for breach of the repairing covenant are capped at the diminution in value of the landlord’s reversion caused by the disrepair. Put simply: even if the “cost of works” is £300k, if expert valuation evidence shows the property is only worth £120k less due to the disrepair at lease end, the cap bites at £120k for repair items. This is a powerful negotiating lever.

b) Supersession

If the landlord intends to do works (e.g., refurbishment or redevelopment) that replace or render pointless the tenant’s alleged works, they cannot recover those costs from the tenant. You’re not liable to fund improvements or a different scheme. Evidence of the landlord’s actual intentions and scope is crucial.

c) No betterment

Claims must not leave the landlord in a better position than performance of the covenants would have achieved. For example, replacing a worn but serviceable roof with a new high-spec system is often over-recovery unless the lease clearly requires replacement at that point.

4) The Dilapidations Protocol—how the process should run

The Pre-Action Protocol for Claims for Damages in Relation to the Physical State of Commercial Property at Termination of a Tenancy (commonly “the Dilapidations Protocol”) encourages proportionate, evidence-based resolution without court.

Typical flow:

Landlord’s Schedule of Dilapidations (often served near or after lease end). It should include a quantified demand and the surveyor’s endorsement that the works (or loss) claimed reflect the tenant’s obligations.

Tenant’s Response (commonly within c. 56 days in practice): a reasoned, item-by-item reply stating which items you accept, dispute, or consider superseded or capped by Section 18(1), with alternative costs where appropriate.

Experts and settlement: Parties should consider ADR (negotiation, mediation, without-prejudice meetings).

Proceedings as last resort: Only once positions are narrowed, evidence is exchanged, and the Protocol steps have been followed.

Tip: Meeting on site with both surveyors (and, where relevant, valuation experts) often unlocks pragmatic settlement.
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5) Lease hotspots that drive liability

Before you negotiate, mine your lease and documents for these levers:

Extent of demise: Are roofs, structure, and external walls included or excluded?

Schedule of Condition: If annexed, the repairing standard may be “no worse than” the recorded condition.

Qualified repair wording: “Keep” vs “put and keep”; “good and substantial repair”; “tenant-like repair” - each subtly shifts scope.

Decoration clause: Frequencies and whether decoration is still required if a break is exercised part-way through a cycle.

Yield-up and reinstatement: Does the landlord need to serve a reinstatement notice by a fixed date? Did they do so?

Alterations consents: Look for licences; many require reinstatement only if the landlord elects.

Statutory compliance: Ensure items pursued are genuinely tenant obligations under the lease, not general owner duties.

Service charge carve-outs: Some repairs may already be landlord obligations via service charge.

Jervis v Harris (self-help): Check any clause allowing landlord entry to do works during term and recharge as debt (different to damages).

Break clause conditions: Vacant possession and compliance conditions can create separate risks from dilapidations damages. Treat them early.

6) Reinstatement vs repair—don’t blur them

Reinstatement is about undoing alterations you made (partitioning, M&E, mezzanines, signage, comms rooms, shop-fit). Repair is about remedying defects in the demised premises. Keep them as separate debates; each has different tests and evidence. Where the landlord keeps your alterations or plans a fit-out that would remove them anyway, supersession arguments are strong.

7) Should tenants do the works—or settle in cash?

There is no universal answer; run a works vs cash comparison early:

Do the works when:

You can complete before lease end (or within agreed period) without disrupting operations.

Scope is clear and finite, with good contractor pricing.

You want certainty over future claims (get the landlord to sign off).

Cash settle when:

The landlord is redeveloping/refurbishing (supersession likely).

You have time pressure (e.g., tight break date).

Section 18(1) evidence suggests a low diminution figure vs high works cost.

The landlord’s intended works materially change the premises.

Pro move: If you settle in cash, ring-fence the settlement with a properly drafted full and final agreement capturing all heads of claim.
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8) Building your defence: evidence that moves the dial

Lease pack: executed lease, licences, deeds of variation, side letters, schedules of condition, plans.

Photographic record: dated, geo-tagged if possible; capture condition on exit and pre-tenant condition where available.

Maintenance history: PPM logs, reactive works orders, warranties, test certificates, FMR documentation.

Alterations file: As-built drawings, O&M manuals, consent correspondence, reinstatement notices (and whether served in time).

Landlord intention: planning applications, tender packs, contractor appointments, design team appointments, board papers—anything proving supersession.

Valuation evidence: Instruct a Section 18(1) valuer early. Their diminution assessment is often the biggest cost lever.

Independent pricing: Commission competitive contractor quotes for disputed items to benchmark the landlord’s figures.

9) Cost heads—how claims are typically built (and challenged)

Works costs usually include: direct works, preliminaries, access, protection, testing/commissioning, professional fees, overheads & profit (OHP), and contingency. Each line should be reasonable and linked to actual tenant covenant breaches.

Other heads (commonly disputed):

Loss of rent during the reasonable works period. Challenge the assumed programme, whether the market truly requires a reduced rent, and whether the landlord mitigated loss.

Rates/service charge during works: only to the extent the disrepair causes them.

Professional fees: must be reasonable and proportionate to the claim.

Management time: claimable only if clearly evidenced and caused by the breach.

Always check for double counting (e.g., claiming both reinstatement removal and replacement works where redevelopment would dispense with both).

10) Negotiation strategy that works for tenants

Triage the Schedule: Accept clear-cut items (cheap goodwill wins).

Re-price robustly: Use market-tested rates and contractor quotes.

Evidence supersession: Obtain and disclose enough landlord-intention evidence to make the point stick.

Deploy Section 18(1): Commission a diminution valuation and lead with the cap.

Sequence the heads: Negotiate scope first, rates second, other heads last.

Use ADR: A without-prejudice meeting with surveyors and valuers often narrows the gap dramatically.

Close cleanly: Document settlement terms carefully (payment sum, VAT position, target date, release wording, reinstatement election).

11) Break clauses and dilapidations—deal with these early

Break clauses often require vacant possession, payment of rent, and sometimes compliance with covenants. These conditions are strict. Missing a reinstatement notice deadline or failing to remove your fit-out when vacant possession is required can invalidate the break even if a dilapidations settlement might otherwise have been negotiated after expiry.

Action points:

Calendar notice dates for reinstatement elections months in advance.

Audit “vacant possession” obligations (removal of chattels/fixtures that are yours).

Agree a pre-break sign-off process where possible.

12) Timelines and checklists for tenants

12+ months before lease end (or before exercising a break)

Review the lease and all side documents. Identify reinstatement notice deadlines and decoration cycles.

Commission a tenant’s pre-exit survey to spot big-ticket items (roof, M&E, façade).

Decide works vs cash strategy in principle.

If works are likely, engage a project manager/cost consultant.

6–9 months before lease end

Request the landlord’s position on reinstatement (if not already served).

Obtain contractor prices for your preferred scope.

Start collating supersession evidence (monitor planning submissions and tender activity).

3–6 months before lease end

If doing works, mobilise. Seek landlord approvals for access and method statements.

If cash settlement likely, prepare a reasoned response to the likely Schedule (or your own scoping note), highlighting Section 18(1) and supersession.

At lease end

Hand back in line with yield-up and vacant possession obligations.

Compile a handover pack: keys, codes, manuals, test certificates, meter readings, photographic record.

Post-handover (upon receiving the Schedule)

Instruct a dilapidations surveyor and Section 18(1) valuer promptly.

Issue a reasoned response within the typical practice period.

Propose a without-prejudice meeting to agree scope and quantum.

Download FRI Checklist

13) Common tenant pitfalls (and how to avoid them)

Ignoring reinstatement notice deadlines. Track them and obtain the landlord’s election in writing.

Assuming you must replace like-for-like. Often you only need to repair and make good, not upgrade.

Forgetting the Schedule of Condition. If you have one, use it to anchor the standard.

Leaving it all to the last month. Early planning saves multiples of cost and avoids break failures.

Paying for the landlord’s improvement plans. Use supersession to resist paying for a different scheme.

Accepting inflated prelims/OHP. Benchmark the build-ups and challenge the programme.

Overlooking the cap. Don’t negotiate on works cost alone—lead with Section 18(1).

14) Example structure of a strong tenant response (Scott Schedule)

When you receive the landlord’s Schedule (often presented as a Scott Schedule), reply line-by-line:

Item reference

Landlord’s description & cost

Tenant’s position (accept/deny/partially accept)

Reason (lease clause/Schedule of Condition/supersession/betterment)

Tenant’s alternative scope and cost

Notes (photos, drawings, evidence refs)

Keep the tone professional and evidence-led; avoid bare denials.

15) FAQs - Tenant Dilapidations Guide

What is a fair dilapidations settlement?

One that reflects the true covenant standard, excludes superseded or betterment items, and respects the Section 18(1) cap on repair damages. Fairness comes from evidence, not averages.

Can my landlord claim loss of rent?

Sometimes, but only to the extent the disrepair actually causes a delay or rent shortfall and where mitigation is shown. Challenge the programme, voids, and market assumptions.

Do I have to reinstate my alterations?

Check the lease and any licences. Many require reinstatement only if the landlord served a valid election by a specified date. If they miss it, reinstatement may fall away.

Should I do the works or pay cash?

Run both options: programme risk, cost certainty, landlord intentions, and likely diminution outcome. Choose the route that delivers lowest net cost and lowest risk.

What if the landlord is redeveloping?

Strong supersession arguments may remove many items. Seek proof of the landlord’s scheme and timings.

Is there a time limit for claims?

Dilapidations claims are contractual and generally subject to limitation periods under the Limitation Act. Don’t rely on this tactically—engage early and follow the Protocol.

Does a Schedule of Condition help?

Often, yes. It can limit your duty to “no worse than recorded” condition, preventing you paying for pre-existing defects.

16) How to prepare for negotiation day

Bring printed packs: lease extracts, Schedule of Condition pages, your Scott Schedule, photos, contractor quotes, and your Section 18(1) summary.

Agree ground rules: talk scope item-by-item before price.

Capture agreed items live in a shared schedule; defer only points needing further evidence.

Close with a heads of terms note of what’s agreed and the next steps.

17) The bottom line for tenants

Dilapidations is not a “pay what the landlord asks” process. It’s a structured, evidence-based negotiation bounded by your lease, tempered by common-law principles, and capped by statute. Tenants who prepare early, separate reinstatement from repair, obtain valuation evidence, and challenge superseded items routinely secure significant savings—without burning relationships. Treat this tenant dilapidations guide as your checklist and start six to twelve months before the end.

Tenant Dilapidations Guide - Related Resources

Dilapidations Glossary of Key Terms

Understanding Section 18(1) and Diminution Valuations

Supersession in Dilapidations: What It Means for Landlords and Tenants

Contact - Tenant Dilapidations Guide

Need help with a dilapidations matter? If you want an expert to triage your Schedule, frame a Scott Schedule response, or produce a Section 18(1) valuation, our team can step in at any stage—from pre-exit strategy to final settlement.

From initial inspections to final settlement, we bring clarity and confidence to every stage.

We assist commercial landlords and tenants on all aspects of lease obligations, repair and dilapidations.

We provide specialist surveys, new lease schedules of condition and general dilapidations advice.

For any help or advice on repair obligations, Dilapidations issues; or to commission a schedule of condition for a new lease call us on 020 4534 3132 or contact one of the team :