Dilapidations: frequenty asked questions

Insights - 12/06/2020

Even though dilapidations claims vary in each case, there are some questions which tend to come up in most cases. In this post, our property solicitors look at some of the common dilapidations frequently asked questions.

When should a Schedule of Dilapidations be served?

It really depends on the circumstances of the case and the wording of the lease.

In the vast majority of cases, the dilapidations claim is brought towards the end of the lease because this is often when the landlord’s losses are most keenly felt. This is known as a terminal Schedule of Dilapidations. In these cases, the timing of service could be crucial and therefore the lease should be checked in detail and in plenty of time before service and the end of the lease.

A Schedule of Dilapidations can also be brought during the continuation of the lease. This is known as an interim Schedule of Dilapidations. This is however a more complicated process as there statutory requirements which govern the process.

How can I (a tenant) avoid a dilapidations claim?

Given the nature of these claims, it is almost impossible for a tenant to avoid a claim in its entirely. This is because it is very difficult to return the premises to the landlord in the precise condition, as required by the covenants in the lease. Particular, after a long period of occupation and continuous use.

However, tenants can mitigate their liability, substantially so in many cases by formulating a compliance strategy ahead of the expiry of the lease. This is something that we have successfully achieved for many tenants.

What is the “Section 18 cap”?

This refers to Section 18(1) of the Landlord and Tenant Act 1927, one of the most important pieces of legislation in the context of Dilapidations Claim. Section 18(1) operates to cap the amount of damages that a landlord can recover for breach of the repairing covenants in a lease. It do so by:

  • Limiting the amount payable to the sum equal to the reduction in the value of the landlord’s reversionary interest caused by the alleged breach. So, even if there is actual damage caused by a tenant’s failure to repair, but this damage does not reduce the value of the landlord’s reversionary interest, then the value of that claim would be reduced to zero.
  • It also excludes any damages in circumstances where the landlord is going to make structural alterations which would render the repairs valueless. For example, if the landlord is proposing to demolish the premises, such that this would supersede any damage caused by the tenant breaches its repairing covenant, the landlord would be unable to claim damages for that breach.

The Section 18 Cap is a cornerstone of Dilapidations Claims and one which must be considered, whether you are the landlord or tenant.

As landlord, am I entitled to claim for loss of rent?

The landlord may be able to claim loss of rent for the duration of the period reasonably necessary to carry out works required to put the premises back into repair. However, there are difficulties with these claims. For example, it would have to be shown that the loss of rent is due to the need to repair the property and no other reason (for example, market forces). Some claims for loss of rent will also be caught by the “Section 18 Cap” (see above for details)

Therefore, it depends on the facts and circumstances of each case.

What is the Dilapidations Protocol?

This is a set of Civil Court Rules which govern the conduct of terminal dilapidations claims before Court proceedings are issued. The protocol is available here.

Both landlords and tenants are expected to follow the Dilapidations Protocol. A failure do so could result in costs sanctions being made against the non-compliant party in any subsequent proceedings.

Do I need a specialist surveyor?

The short answer is “yes”. To initiate the claim and respond to it, a surveyor will be required to prepare the Schedule of Dilapidations (for the landlord) and a surveyor will usually be required to respond to it (for the tenant). Aside from anything else, the Dilapidations Protocol anticipates the involvement of surveyors in the pursuit of pre-action correspondence and settlement.

If you have any further queries regarding  dilapidations please do not hesitate to contact Graham Halsall who leads the property litigation team in our Redhill office

Disclaimer:

Although correct at the time of publication, the contents of this newsletter/blog are intended for general information purposes only and shall not be deemed to be, or constitute, legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article. Please contact us for the latest legal position.