16 March 2026
Dilapidations are a common source of contention at the end of a commercial lease, often involving significant costs. For tenants, claims can come as an unwelcome surprise, even when they believe they have left a property in reasonable condition. For landlords, understanding their rights and obligations is equally crucial.
At their core, dilapidations relate to whether a tenant has complied with their lease obligations regarding the property’s physical condition. What a landlord can claim, and what a tenant must remedy or pay for, depends primarily on the wording of the lease.
What Are Dilapidations?
Dilapidations arise from breaches of a tenant’s repairing, decorating, reinstatement, or statutory compliance obligations under a commercial lease. They are typically identified as a lease approaches its end, though interim claims may sometimes arise during the term.
A landlord may require the tenant to complete the necessary works before the lease ends or, alternatively, recover the costs of carrying out the works themselves once the tenant has vacated.
Repair Obligations
Most commercial leases require tenants to keep the property in repair, but the scope of this obligation can vary. Some leases impose a full repairing obligation, obliging the tenant to maintain the property in good repair throughout the lease, regardless of its condition at the start. Others limit the obligation to the property’s initial state.
Repair obligations cover more than major structural issues. They may include worn flooring, damaged ceilings, broken fixtures, defective services, or deterioration due to lack of maintenance. Determining whether damage constitutes disrepair or merely fair wear and tear is often a central point of dispute.
Redecoration Requirements
Leases often require tenants to redecorate at set intervals and again at the end of the lease term. These obligations may apply internally, externally, or both, depending on the lease. Failure to complete required redecoration can form part of a dilapidations claim, even if the property is otherwise in reasonable condition.
Reinstatement of Alterations
Commercial tenants often make alterations to suit their business needs, such as installing partition walls, cabling, signage, or kitchen facilities. Leases frequently require reinstatement of the property to its original condition at the end of the tenancy.
If alterations were carried out under a licence for alterations, the licence typically outlines specific reinstatement obligations. Failure to reinstate can result in the landlord including the cost of such works in dilapidations claim.
Compliance with Statutory Requirements
Many leases place responsibility on tenants to maintain compliance with statutory obligations, including fire safety, asbestos management, electrical testing, and other health and safety regulations. Non-compliance may lead to remedial works or investigations being included in a dilapidations schedule, even if the tenant was unaware of the issue during occupancy.
The Dilapidations Process
The process usually begins with the landlord or their surveyor preparing a schedule of dilapidations, which sets out alleged breaches, required remedial works, and estimated costs.
If the tenant does not complete the works before the lease ends, the landlord may pursue a monetary claim for damages, often referred to as a quantified demand. This can include the cost of works, professional fees, and, in some cases, loss of rent.
Limits on a Landlord’s Claim
Under section 18(1) of the Landlord and Tenant Act 1927, damages for disrepair are capped at the amount by which the disrepair has reduced the value of the landlord’s interest in the property.
This means a landlord cannot automatically recover the full cost of repairs if the works would not increase the property’s value. For example, where a building is earmarked for redevelopment or substantial alteration, the effect of disrepair on value may be minimal.
The Importance of a Schedule of Condition
Tenants can limit dilapidations exposure by agreeing a schedule of condition at the start of the lease. This is usually a photographic record of the property’s condition at commencement.
When incorporated into the lease, a schedule of condition can limit a tenant’s repairing obligations, preventing them from being required to improve the property beyond its initial state.
Managing Risk and Avoiding Disputes
Dilapidations are highly technical and often require both legal and surveying expertise. Early engagement, careful review of lease obligations, and realistic negotiation can significantly affect outcomes.
Whether acting as a landlord or tenant, seeking advice from a solicitor at an early stage can clarify obligations, assess risk, and help avoid unnecessary costs and disputes at the end of a lease. We regularly support businesses across Dorset, including Bournemouth, Christchurch and Poole, with practical legal advice tailored to their commercial needs.
Contact us today to discuss your options and ensure your lease strategy works for your business. Call 01202 526343 or send us an enquiry through our website to arrange a consultation.
