A Schedule of Dilapidations is a formal document prepared by surveyors detailing breaches of lease covenants relating to property repair and condition. For Essex businesses leasing commercial premises in Brentwood, Chelmsford, or across the county, understanding dilapidations is crucial to avoiding unexpected costs at lease end. This guide explains everything tenants and landlords need to know.
What Is a Schedule of Dilapidations?
A Schedule of Dilapidations is a detailed schedule listing items of disrepair and breaches of lease covenants, typically prepared by a landlord's surveyor. It identifies:
- Disrepair: Items requiring repair under the lease
- Want of decoration: Decorative works needed
- Breaches of covenant: Alterations made without consent, unauthorized changes
- Estimated costs: Landlord's anticipated costs to remedy breaches
Types of Schedules
1. Interim Schedule (During Lease)
Served during the lease term to prompt the tenant to carry out repairs. Typically issued if significant disrepair is noticed.
Purpose:
- Prevent further deterioration
- Give tenant opportunity to remedy breaches
- Avoid costly repairs accumulating to lease end
- Maintain property condition
Tenant action: Review schedule with your surveyor, negotiate if disputed, carry out agreed works promptly to avoid lease forfeiture risks.
2. Terminal Schedule (At Lease End)
Served at or shortly after lease expiry, setting out all outstanding breaches. This usually precedes a dilapidations claim.
Timing:
- Can be served up to 6 months before lease expiry
- Often served within days/weeks of lease end
- Landlord has 6 years to pursue claim (limitation period)
Content includes:
- Schedule of Dilapidations (list of breaches)
- Scott Schedule (costs attributed to each item)
- Quantified Demand (total claim amount)
- Diminution valuation (capping the claim to loss in property value)
Common Dilapidation Items in Essex Commercial Properties
Typical Issues Found
- Roof repairs: Cracked/slipped tiles, defective flashings, gutter issues
- External decoration: Flaking/peeling paint on woodwork, fascias, render
- Internal decoration: Worn carpets, marked walls, damaged fittings
- Glazing: Cracked windows, failed double-glazed units, damaged frames
- Mechanical/electrical: Non-functional heating, outdated wiring, faulty lighting
- Unauthorized alterations: Partitions, signage, fittings installed without landlord consent
- Reinstatement: Obligation to remove tenant's alterations and restore to original
- Statutory compliance: Fire safety, asbestos registers, EPC requirements
Essex-Specific Considerations
In Brentwood High Street and Chelmsford commercial districts:
- Older commercial buildings often have aging mechanical systems requiring replacement
- External decoration exposed to weather deteriorates faster
- Period commercial properties may have inherent defects vs. lease obligations
- Parking areas and loading bays require maintenance (resurfacing, line marking)
Tenant's Repairing Obligations
Full Repairing and Insuring (FRI) Lease
Most common for commercial properties. Tenant responsible for:
- All repairs: Internal and external, structural and non-structural
- Decoration: Internal and external at specified intervals (typically every 3-5 years internally, 5-7 years externally)
- Compliance: All statutory requirements, health & safety, building regulations
- Yielding up: Return property in repair consistent with obligations
Internal Repairing Lease
Tenant responsible only for internal repairs. Landlord maintains structure and exterior. Less common for standalone units.
Understanding "Good and Substantial Repair"
Standard covenant requires property to be kept in "good and substantial repair." This means:
- Repair relative to property age, character, and locality
- Not upgrading to "as new" condition (unless lease specifies)
- Addressing disrepair even if present at lease start (unless scheduled)
- Proactive maintenance, not just reactive repairs
The Dilapidations Process
Stage 1: Schedule Preparation and Service
- Landlord's surveyor inspects: Usually shortly before or after lease expiry
- Schedule prepared: Detailed list of breaches with specifications for remedial works
- Scott Schedule: Costs attributed to each item
- Diminution valuation: Assessment of property value loss
- Quantified demand served: Formal claim for costs, capped at diminution value
Stage 2: Tenant's Response
Tenant should immediately:
- Instruct surveyor: RICS chartered surveyor to review and advise
- Assess validity: Are items genuine breaches? Are costs reasonable?
- Consider supersession: Has landlord already redeveloped/altered? (May reduce/eliminate claim)
- Prepare response: Counter-schedule disputing invalid/excessive items
- Quantified assessment: Tenant's surveyor assesses realistic costs
Stage 3: Negotiation
- Surveyors negotiate on behalf of parties
- Aim to reach settlement without litigation
- Typical outcomes: 30-70% of original claim value
- Most cases settle without court proceedings
Stage 4: Dilapidations Protocol (If Unresolved)
If negotiation fails, parties follow Pre-Action Protocol for Claims:
- Exchange of detailed schedules and costings
- Diminution valuation if not already provided
- Consider alternative dispute resolution (ADR/mediation)
- Court proceedings as last resort
Costs and Timescales
Typical Dilapidations Claim Values (Essex)
- Small retail unit (500-1,000 sq ft): £5,000-£25,000
- Medium office (2,000-5,000 sq ft): £15,000-£75,000
- Large warehouse/industrial (10,000+ sq ft): £50,000-£250,000+
- High Street retail (Brentwood/Chelmsford): £20,000-£100,000
Factors affecting value:
- Property size and age
- Lease length (longer leases = more deterioration)
- Tenant maintenance during term
- Landlord's future plans (refurbishment vs. reletting as-is)
Professional Fees
- Landlord's surveyor: £2,000-£10,000+ (recoverable from tenant if successful)
- Tenant's surveyor: £1,500-£8,000 (defensive, not usually recoverable)
- Legal fees: £3,000-£20,000+ if litigation pursued
Timescales
- Schedule preparation: 4-8 weeks after inspection
- Negotiation period: 3-6 months typical
- Protocol compliance: Additional 2-4 months if unresolved
- Court proceedings: 12-24 months to trial if necessary
Tenant Strategies to Minimize Liability
During the Lease
- Commission building surveys: Regular inspections (every 2-3 years) identify issues early
- Maintain photo records: Document property condition at lease start and periodically
- Comply with decorating covenants: Don't skip scheduled decoration cycles
- Seek consent for alterations: Always obtain landlord's written consent
- Keep maintenance records: Evidence of proper upkeep helps negotiations
- Review lease approaching expiry: Commission pre-exit survey 12-18 months before lease end
Pre-Exit Survey
Commission your own surveyor 12-18 months before lease expiry:
- Identifies likely dilapidations claims
- Provides cost estimates for works
- Allows time to complete works before exit
- Often cheaper to rectify than pay dilapidations claim
- Demonstrates good faith to landlord
Cost: £800-£3,000 depending on property size. Usually excellent investment.
At Lease End
- Remove tenant items: Unless obliged to leave them
- Restore unauthorized alterations: If lease requires reinstatement
- Professional clean: Present property in best condition
- Complete obvious repairs: Addressing visible issues reduces claim value
Diminution and Section 18 Valuation
Diminution in Value Cap
Under Landlord and Tenant Act 1927 Section 18(1), dilapidations claims are capped at the diminution (reduction) in property value caused by breaches.
Key principle: If landlord intends to demolish or substantially refurbish, the diminution may be nil or minimal, significantly reducing the claim.
Supersession
If landlord's works will supersede (replace/remove) the dilapidations items, those items shouldn't be claimed for. Examples:
- Property scheduled for demolition: Claim likely nil
- Comprehensive refurbishment planned: Many items will be superseded
- Reconfiguration of space: Partitions, services, finishes replaced anyway
Tenant defense: Request evidence of landlord's intentions. Demand diminution valuation showing supersession impact.
Frequently Asked Questions
Can I negotiate a dilapidations claim myself?
Not advisable. Dilapidations claims are technical, involving building surveying expertise and legal understanding. Landlords use professional surveyors—you should too. DIY negotiation often results in higher settlements. Surveyor fees (£1,500-£8,000) typically save multiples of their cost in reduced liability.
Should I do the works myself or pay the claim?
It depends. If you have time before lease expiry, doing works yourself is usually cheaper (40-60% of landlord's quoted costs). However, after lease expiry you lose access, making cash settlement necessary. Factor in: time available, access, disruption to business, comparative costs. Your surveyor can advise.
Can landlord recover costs even if property is demolished?
No. If the property will be demolished, the diminution value is nil, so the dilapidations claim is capped at zero. However, landlord must provide evidence of firm demolition intentions. Similarly, if comprehensive refurbishment will supersede the works, those items cannot be claimed. This is a powerful tenant defense.
What if I disagree with items in the schedule?
Instruct your surveyor to prepare a detailed response (counter-schedule) disputing invalid items. Common disputes: items already in disrepair at lease start (unless you accepted responsibility), betterment (landlord claiming for improvements beyond lease requirements), excessive/unreasonable costs, items not tenant's responsibility under lease terms.
How long can landlord pursue a dilapidations claim?
Landlords have 6 years from the date cause of action accrued (usually lease expiry date) to issue court proceedings. After 6 years, claims are statute-barred. However, most claims are settled within 6-18 months of lease end. Don't ignore a schedule hoping it goes away—engage promptly to achieve best settlement.
Professional Dilapidations Services in Essex
Our RICS chartered surveyors provide comprehensive dilapidations services for tenants and landlords across Essex. Whether you need a pre-exit survey, negotiation support, or terminal schedule preparation, we deliver expert, cost-effective solutions.
Pre-exit surveys | Schedule negotiation | Terminal schedules | Expert evidence
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