Received a dilapidations schedule from your landlord? Don't panic — and don't settle. Most dilapidations claims can be significantly reduced with the right approach. Our senior dilapidations surveyor Rebecca Thornton walks you through the process step by step.
Don't Panic — Most Claims Are Overstated
I've reviewed hundreds of terminal dilapidations schedules from landlords over the course of my career. The vast majority — in my experience, well over 80% — are materially overstated. Items are included that aren't covered by the lease. Costs are inflated beyond current market rates. Betterment is claimed (which is not permitted). And Section 18(1) considerations are simply ignored.
The single most important piece of advice I can give any commercial tenant who has received a dilapidations schedule is this: do not settle without first engaging a building surveyor to review the claim on your behalf. The cost of that review will almost certainly be recovered many times over.
Our average saving on tenant dilapidations claims is 60% of the original landlord schedule. On a £200,000 claim, that's a £120,000 saving. On a £500,000 claim, it's £300,000. The maths is straightforward.
Step 1: Understand What You've Received
A landlord's dilapidations schedule typically takes one of two forms:
- Schedule of dilapidations: A list of alleged breaches of your lease's repairing, decorating and reinstatement obligations, without costs attached.
- Quantified demand: A schedule of dilapidations accompanied by a costed schedule showing the landlord's claimed financial remedy.
The quantified demand is the number you'll be negotiating from. Don't be intimidated by the total — that's not what you'll pay.
Read the covering letter carefully. Note any timescales given for your response. Check whether any deadline is a contractual or statutory requirement, or just a request.
Step 2: Check Your Lease
Before you can challenge a dilapidations schedule, you need to understand exactly what your lease requires. Pull out the lease document and read the repairing, decorating and reinstatement clauses carefully. Key questions:
- What is the exact wording of your repairing obligation? Is it "full repairing" or limited in some way?
- Are you responsible for the external fabric, or only internal areas?
- What are your decorating obligations — how often, and to what standard?
- Does the lease require you to reinstate alterations at the end of the term?
- Is there a schedule of condition attached to the lease that limits your liability?
Every item in the landlord's schedule should have a basis in the specific wording of your lease. Items that don't have that basis should be challenged.
Step 3: Instruct a Building Surveyor Immediately
This is the most important step. A building surveyor experienced in commercial dilapidations will:
- Carry out an inspection of the property (if still possible) to verify the condition as left
- Review the landlord's schedule item by item against the lease obligations
- Challenge items that exceed the lease obligations or misrepresent the condition
- Provide realistic cost assessments for any works that are genuinely owed
- Consider whether a Section 18(1) diminution valuation is appropriate
- Prepare a counter-schedule on your behalf
- Negotiate with the landlord's surveyor towards a settlement
Time matters here. The sooner you instruct a surveyor after receiving the schedule, the more options you have — including inspecting the property before the landlord has carried out any works and changed the evidence base.
Step 4: Review the Landlord's Costings
Even where you accept that certain works are your liability, the landlord's cost assessment may be significantly above current market rates. Landlords often use their own contractors' quotes, which may be inflated or which include a management fee that isn't chargeable.
Your surveyor will prepare alternative cost assessments for any items you accept, based on current market rates for the relevant works. In our experience, the cost re-assessment alone typically reduces a quantified demand by 20–30% on items that are correctly included in the schedule.
Step 5: Consider a Section 18(1) Diminution Valuation
Section 18(1) of the Landlord and Tenant Act 1927 is one of the most powerful tools available to commercial tenants in a dilapidations dispute. It provides that the landlord's claim is capped at the reduction in the value of the landlord's interest in the property caused by the alleged disrepair.
In practice, this means that if the landlord has already re-let the property at the same rent regardless of the condition, or if the landlord is planning to redevelop and would have demolished or stripped out the building anyway, the tenant's liability can be dramatically reduced — sometimes to near zero.
A Section 18(1) valuation is prepared by a suitably qualified surveyor (we can provide this as part of our service) and can be a decisive factor in dilapidations negotiations.
Step 6: Prepare and Serve Your Counter-Schedule
The formal response to a landlord's dilapidations schedule is a counter-schedule — a systematic document that goes through each item in the landlord's schedule and either accepts, qualifies or rejects it, with reasons and supporting evidence.
A well-prepared counter-schedule demonstrates that you are taking the claim seriously, that you have expert representation, and that you are prepared to go to dispute resolution if the landlord is unreasonable. In our experience, a professional counter-schedule significantly accelerates settlement — landlords and their solicitors recognise when a claim has been properly reviewed and respond accordingly.
Step 7: Negotiate Towards Settlement
Most dilapidations disputes settle by negotiation between the surveyors, without the need for formal dispute resolution. The process typically involves:
- Exchange of formal schedules and counter-schedules
- Without-prejudice meeting or correspondence between surveyors to narrow the issues
- Agreement on items in principle, followed by negotiation on costs
- Final settlement agreed and documented in a settlement agreement
The settlement agreement is the document that draws a line under the claim. Make sure it is comprehensive — it should state the settlement sum, the basis for it, and confirm that the landlord's claim is fully and finally settled with no further claims arising.
Step 8: What If Negotiations Fail?
If the parties cannot agree, the dispute can be referred to:
- RICS dispute resolution: An independent RICS surveyor acts as arbitrator or independent expert
- Expert determination: An agreed independent expert makes a binding determination
- Court proceedings: Either party can issue proceedings for damages in the county court or High Court
In practice, the threat of formal dispute resolution often unlocks a pragmatic settlement. Landlords and their solicitors are acutely aware of the costs and uncertainty of litigation, and most prefer a negotiated outcome.
Common Mistakes Tenants Make in Dilapidations Disputes
- Settling without getting advice — the most expensive mistake
- Carrying out works without proper planning — sometimes paying to carry out works costs more than the settlement value
- Missing the property inspection window — leaving the property before documenting its condition thoroughly
- Not engaging with the process promptly — delays can be interpreted as acceptance
- Allowing emotion to drive decisions — dilapidations is a commercial negotiation, not a personal dispute
How We Can Help
At My Commercial Building Surveyor, our dilapidations service for commercial tenants includes everything you need to defend your position: a thorough review of the landlord's schedule, an independent inspection of the property, a professional counter-schedule, cost re-assessment, Section 18(1) valuation where appropriate, and full negotiation on your behalf until settlement is reached.
Our average saving on tenant dilapidations claims is 60% of the original landlord schedule. Contact us the moment you receive a dilapidations schedule — the earlier we act, the more we can save you.