Guide to Dilapidations Issues

Consider the extent of the repairing obligations imposed by the lease. Bear in mind that:

• an obligation to keep a property in repair will generally require a tenant to put the property into repair;
• when assessing the appropriate standard of repair, the Court will consider the age, character and locality of the premises;
• a liability for repair does not usually involve making improvements;
• inherent defects do not generally constitute disrepair, but defects could still cause disrepair for which the tenant is liable;
• any Schedule of Condition attached to the lease will restrict the extent of the repairs required.

Landlords and tenants can establish whether there has been a breach of the repairing obligations by instructing a surveyor to inspect the property and prepare a Schedule of Dilapidations.

For Schedules prepared for service on a defaulting party, the Schedule should identify the breaches, i.e. the items which do not meet the standard of repair required by the lease, and specify the appropriate remedies required. Photographs and/or video evidence are helpful for proving breach.

Landlords should consider the standards set down by the Dilapidations Protocol – a Pre-Action Protocol within the Civil Procedure Rules. The Court is likely to have regard to the standards set down by the protocol when assessing whether the parties have behaved reasonably in dealing with a dispute.

The protocol only aims to set out best practice and rigid compliance is not required – consider whether the detailed steps set down by the protocol are required in your particular case.

In accordance with the protocol, landlords will probably want to:

• Serve a Schedule of Dilapidations and Quantified Demand within a reasonable time after the expiry of the tenancy, ideally not more than 56 days later. (N.B. If the landlord wants the tenant to carry out the necessary repairs before the tenant vacates the property, it should obviously serve a Schedule well before the expiry of the lease.)
• Arrange a meeting with the tenant to discuss the claim.
• Ask the tenant to respond to the Schedule within a reasonable time – the protocol indicates that the tenant should respond within 56 days after service of the Quantified Demand.

Depending on the circumstances, a landlord may want to arrange for a Section 18(1) valuation to be prepared and served on the tenant at the appropriate time.

Parties should bear in mind section 18(1) of the Landlord and Tenant Act 1927.

The two elements of section 18 are known as the two “limbs”:

• The first limb:
  Any damages for dilapidations will be limited to the amount by which the value of the landlord’s reversion is diminished as a result of the tenant’s breaches (see Ultraworth Limited v General Accident Fire & Life Assurance Corporation plc & Buhler Limited (2000)); and
• The second limb:
  A landlord cannot recover damages where it intends to pull down the property at or shortly after the termination of the tenancy, or for repairs where the landlord intends to carry out structural alterations within that same period which would make those repairs by the tenant valueless.