Dilapidations are one of the most expensive surprises facing commercial tenants in the UK. When your lease ends, the landlord will assess the condition of the property against your repair and reinstatement obligations — and the resulting claim can run into hundreds of thousands of pounds. Dilapidations claims cover three categories: disrepair (failure to maintain the property), reinstatement (removing tenant alterations and restoring the premises), and decoration (repainting and refinishing). The critical issue is that your liability is set at the moment you sign the lease, but the bill arrives years later when you leave. Understanding your repair covenant, what standard it requires, and what the property's condition was at the start of your tenancy is essential to managing this risk.
What is a Dilapidations Clause?
Dilapidations is the term used in UK commercial property law for breaches of the tenant's obligations to maintain, repair, and return the premises in the condition required by the lease. At lease end, the landlord instructs a surveyor to prepare a 'schedule of dilapidations' — a list of alleged breaches with estimated costs. The tenant can dispute items, negotiate a settlement, carry out the works themselves, or face a court claim. Dilapidations are governed by the lease covenants and the Landlord and Tenant Act 1927.
Red flags to watch for
An FRI lease makes you responsible for the condition of the entire property, including structure, roof, and services. Without a schedule of condition recording the state at lease commencement, you could be required to return the property in better condition than you received it.
If you must reinstate all alterations at lease end regardless of the landlord's wishes, you could spend significant sums removing improvements the next tenant actually wants.
A covenant to 'repair, renew, and replace' is significantly more onerous than one to 'repair' alone. Renewal can require replacing entire building systems at end of life, not just maintaining them.
If you can only settle dilapidations by paying the landlord's claim (not doing the work yourself), you lose the ability to manage costs by using your own contractors at competitive rates.
Fair wear and tear is an implied concept, but an express covenant to return the property in 'as new' condition overrides this and can result in disproportionate claims.
Your legal rights
Dilapidations in England and Wales are governed by the lease covenants and the Landlord and Tenant Act 1927, section 18(1), which caps the landlord's damages at the diminution in value of their reversion caused by the tenant's breaches — meaning the landlord cannot recover more than the actual decrease in property value, regardless of the cost of repairs. The Dilapidations Protocol (incorporated into the Civil Procedure Rules Pre-Action Protocols) requires landlords to serve a quantified schedule of dilapidations within a reasonable time of lease expiry and engage in negotiation before issuing proceedings. The Leasehold Property (Repairs) Act 1938 gives tenants protection against mid-term dilapidations claims on leases originally granted for 7+ years with 3+ years remaining. RICS publishes the Dilapidations Guidance Note which sets professional standards for surveyors assessing dilapidations claims.
Questions to ask before you sign
- 1Is this a full repairing lease, and if so, has a schedule of condition been prepared to limit my liability to the current state?
- 2Does the repair covenant extend to renewal and replacement, or is it limited to repair in the ordinary sense?
- 3What are my reinstatement obligations at lease end, and can the landlord waive reinstatement for improvements they wish to retain?
- 4Do I have the right to carry out dilapidation works myself before or after lease expiry?
- 5Is there a cap on my dilapidations liability, and does the lease acknowledge the section 18(1) cap?
- 6What is the decoration cycle specified in the lease, and am I required to redecorate in the final year?
Disclaimer: This guide is for educational purposes only and does not constitute legal advice. Contract law varies by jurisdiction and individual circumstances. Always consult a qualified legal professional before making decisions based on this information.