What Are Dilapidations? Schedules, Costs and Timelines

The term comes from property law rather than everyday English, and it covers both the tenant’s obligations and the landlord’s claim when those obligations are not met. It usually becomes urgent in the last year or two of a lease, when a schedule arrives or a tenant starts planning a move. This guide explains what dilapidations mean in practice, the documents involved, how claims are valued and the timeline from lease end to settlement.

These are indicative ranges for budgeting. The real figure depends on your lease. Office Refurbishment London carries out strip-out and reinstatement works across London, and we can price the works in a schedule so you can decide whether to do them or settle.

What does dilapidations mean?

In property, "dilapidations" refers both to the state of disrepair of a building and to the legal claim for it. In a commercial lease, the tenant usually agrees to keep the premises in repair, to redecorate at set times, to remove alterations when asked and to hand back the premises in a specified condition. If the tenant does not, the landlord can claim damages: that claim is "dilapidations", often shortened to "dilaps".

Work out a budget for your own floor area, scope and location with our office fit-out cost calculator.

What do dilapidations cover?

• Repair. Keeping the premises in the state of repair the lease requires. Depending on the lease, that can include the structure, windows, services and finishes.
• Reinstatement. Removing the tenant's alterations, such as partitions, kitchens, raised floor cabling and signage, and putting the space back to its original layout. Often required by the licence for alterations.
• Redecoration. Repainting and refinishing, usually in the final year or at the end of the lease.
• Statutory compliance. Meeting legal requirements the lease puts on the tenant.
• Yielding up. Handing back keys, documents and the premises in the condition required.

What is a schedule of dilapidations?

A schedule of dilapidations is a document, usually prepared by the landlord's building surveyor, that lists each alleged breach of the lease, the lease clause it relates to, the work needed to remedy it and, in a terminal schedule, the cost. There are two main types:

• Interim schedule. Served during the lease, often in the last few years, to require repairs while the tenant is still in occupation.
• Terminal schedule. Served near or after the end of the lease, setting out what the landlord says is owed.

Our guide to the schedule of dilapidations shows an example layout.

What is the timeline for a dilapidations claim?

In England and Wales, the Pre-Action Protocol for terminal dilapidations claims sets out how claims should be made and answered. Our guide to the Dilapidations Protocol explains the steps.

How are dilapidations costs worked out?

The landlord's surveyor prices each item on the schedule. The tenant's surveyor responds, often disputing whether items are breaches at all, whether the proposed remedy is reasonable, and whether the price is fair. Two important legal limits apply:

• Section 18(1) of the Landlord and Tenant Act 1927 generally caps damages for disrepair at the amount by which the disrepair reduces the value of the landlord's interest.
• The second limb of Section 18 means damages are not recoverable for failing to repair if the landlord intends to demolish or make alterations that would make those repairs worthless.

That is why the landlord's plans for the building matter a great deal. Take advice from a building surveyor and solicitor on how these rules apply to your lease.

What does reinstatement mean in a lease?

Reinstatement means putting the premises back to the layout and condition they were in before your alterations. Many licences for alterations say you must reinstate at the end of the lease, while others say you must do so only if the landlord asks, usually by giving notice a set number of months before the lease ends. That difference matters. If the obligation depends on a notice and the landlord does not serve one in time, you may not have to remove your fit-out at all. If reinstatement is automatic, you should plan for it. Keep every licence for alterations with your lease, because the reinstatement clause is often there rather than in the lease itself.

Related reading: dilapidations provision and dilapidations report.

Who prepares and responds to a schedule?

The landlord's building surveyor normally prepares the schedule, visiting the premises, checking the lease and listing each item. The tenant usually appoints its own building surveyor to respond, item by item, with comments and a counter-figure. Both surveyors should be independent enough to act in line with professional guidance, and the RICS publishes guidance for surveyors working on dilapidations. Solicitors become more involved if the claim is large or heading towards proceedings.

Should you do the works or pay a settlement?

Many tenants price the works themselves before deciding. A fit-out company can quote for the strip-out and reinstatement listed in the schedule, which gives you a benchmark for negotiation.

How can tenants reduce dilapidations?

1. At the start of the lease, agree a photographic schedule of condition and limit repairing obligations to that condition where possible.
2. When fitting out, record the original condition and design for reuse.
3. During the lease, keep the premises maintained and keep records of consents and works.
4. 18 to 24 months before the end, review your obligations, break dates and the landlord's likely plans.
5. Decide early whether to carry out works or settle.

Do dilapidations include VAT?

Generally, a dilapidations settlement is treated as compensation and falls outside the scope of VAT, while works you commission yourself are standard-rated. Our guide to VAT on office refurbishment and dilapidations covers this.

Get a reinstatement quote

If you have received a schedule, or are planning ahead, we can survey the premises and price the strip-out, reinstatement and redecoration. Request a quote and we will be in touch. Our tenant guide to office dilapidations in London covers the London-specific points.

Frequently asked questions

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• Dilapidations Survey: What It Covers and What It Costs
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