Ask the Expert: Can Landlords Claim Dilapidations Without Carrying Out Repairs?

A commercial landlord may identify substantial repair liabilities at the end of a tenancy, but what happens if they have no intention of carrying out the works?

This is an important question in commercial dilapidations, particularly where a landlord plans to refurbish, redevelop or relet the property.

At KEYS Consulting, we assess dilapidations by considering both the tenant’s contractual obligations and the landlord’s potential financial loss. Understanding the distinction between repair costs and recoverable loss is essential when preparing or responding to a Terminal Schedule of Dilapidations.

The Expert Answer: Yes, a commercial landlord may recover dilapidations damages without carrying out the repairs. However, the amount recoverable depends on the lease obligations and the loss established. Supersession and the statutory limitations under Section 18(1) of the Landlord and Tenant Act 1927 are separate considerations that may affect recoverable damages. The landlord’s intentions and supporting evidence are also relevant to assessing the claim.

A Schedule of Dilapidations identifies breaches of lease obligations and the works reasonably required to remedy them. However, the estimated cost of those works does not automatically represent the amount a landlord can recover.

The Dilapidations Protocol states that a landlord’s Quantified Demand should reflect their likely loss, which may differ from the cost of the proposed repairs.

Supersession may arise where a landlord’s intended works would make some repairs required under the lease unnecessary, affecting the amount recoverable for those breaches.

Supersession is distinct from the statutory diminution in value limitation under Section 18(1). It concerns whether the landlord’s own works would render particular remedial works unnecessary, meaning the associated repair costs may not represent a recoverable loss.

For example, consider a tenant who leaves damaged internal partitions at lease expiry.

If the landlord intends to remove those partitions as part of a refurbishment, repairing them beforehand may be unnecessary.

In those circumstances, the landlord may have difficulty establishing a recoverable loss for the repairs that would be rendered redundant.

However, supersession is not automatic simply because refurbishment is planned.

The proposed works, their timing, the landlord’s intentions and the individual lease obligations must all be considered. The landlord’s intentions should also be supported by appropriate evidence rather than assumed solely from a stated intention to refurbish or redevelop.

The RICS professional standard, Dilapidations in England and Wales provides guidance on assessing these matters.

Section 18(1) places an important statutory limitation on damages for breaches of repairing covenants.

Under the Landlord and Tenant Act 1927, damages for disrepair cannot exceed the reduction in the value of the landlord’s reversion caused by the breach.

This is commonly referred to as diminution in value.

Unlike supersession, which considers whether particular repairs would be rendered unnecessary by the landlord’s intended works, the diminution in value limitation under Section 18(1) places a statutory cap on damages for breaches of repairing covenants, based on the effect of the disrepair on the landlord’s reversionary interest.

The legislation also provides that damages cannot be recovered for certain terminal repairing breaches where it is shown that the premises would, at or shortly after lease expiry, be demolished or undergo structural alterations that would render the relevant repairs valueless.

Section 18 specifically concerns repairing covenants. Other obligations, including reinstatement and decoration, require consideration of their contractual nature and the applicable legal principles.

The landlord’s intentions are central to assessing a terminal dilapidations claim.

A landlord may intend to refurbish the premises, change the internal layout or undertake substantial improvements before granting a new tenancy.

These plans can affect whether individual repair items represent an actual financial loss.

For example, replacing damaged flooring may be unnecessary if the landlord intends to remove it during refurbishment. However, unrelated roof repairs may remain necessary.

Each item must therefore be assessed individually rather than assuming the entire claim is either valid or superseded.

Importantly, proposed improvements or alterations do not automatically form part of a recoverable dilapidations claim. The landlord must distinguish between works reasonably required to remedy the tenant’s breaches and works undertaken to improve, modernise or adapt the property for future use.

For example, a Schedule of Dilapidations might identify £40,000 of estimated remedial works. However, if £15,000 relates to repairing partitions that the landlord intends to remove during a planned refurbishment, those repair costs may be superseded. The remaining £25,000 would not automatically represent the landlord’s recoverable loss either, as the relevant lease obligations, evidence of loss and any applicable statutory limitations would still need to be considered.

Assessing supersession requires more than knowing that a landlord intends to refurbish or relet a property.

Relevant evidence may include refurbishment proposals, drawings, specifications, tender documents and records of the landlord’s intentions.

Where available, planning documentation, contractor appointments, approved budgets and evidence of works subsequently undertaken may also help establish whether the proposed works were genuinely intended and likely to proceed. The relevance and weight of this evidence will depend on the circumstances of the claim.

A Chartered Surveyor can review this information alongside the Schedule of Dilapidations to assess which repairs remain necessary and which may be rendered redundant by the proposed works.

This helps establish a more accurate assessment of potential liabilities and supports informed dilapidations negotiations.

A professional dilapidations assessment involves more than calculating repair costs. Chartered Surveyors consider the property’s condition, the tenant’s contractual obligations and the landlord’s intentions.

At KEYS Consulting, our approach considers:

• The relevant lease covenants and associated documentation.
• The property’s condition at inspection.
• The works reasonably required to remedy identified breaches.
• The landlord’s intentions for the property and the available evidence supporting those intentions.
• Potential supersession, the separate statutory limitations under Section 18(1), and the need for specialist advice.

These considerations help establish which remedial works are justified and whether the estimated costs provide an appropriate basis for assessing the landlord’s potential loss.

Where required, a specialist valuation surveyor may undertake a diminution valuation to assess the reduction in the landlord’s reversionary value attributable to disrepair. Legal advice may also be necessary to determine recoverability.

Our Commercial Dilapidations Advice helps landlords and tenants understand their obligations, assess potential liabilities and make informed decisions.

Landlords should establish their intentions for the premises, retain appropriate supporting evidence and obtain professional advice before advancing a claim.

Tenants should carefully review the Schedule of Dilapidations, considering whether the alleged breaches are justified and whether proposed works reflect the landlord’s likely loss.

Early assessment can help identify disputed items, establish where specialist advice is required and support proportionate negotiations.

Following preparation or review of a Schedule of Dilapidations, KEYS Consulting can also be separately instructed to assist with dilapidations negotiations. This may involve reviewing disputed items, considering supporting technical and cost evidence, and working towards an appropriate commercial settlement between the parties.

Whether you are a landlord assessing a terminal claim or a tenant questioning proposed repair costs, KEYS Consulting can provide independent technical advice on lease obligations, remedial works and potential supersession.

We can also be separately appointed to support dilapidations negotiations, helping landlords and tenants work towards a commercially informed settlement based on the available evidence.

Our Chartered Surveyors support commercial clients across Harrow, London and the South East.