Interim Dilapidations Disputes in Commercial Property

‘Dilapidations’ refers to damage to a rented property caused when a tenant doesn’t abide by the repairing responsibilities set out in their lease. This can happen during the lease (Interim Dilapidations) or when it ends (Terminal Dilapidations). 

To assess a tenant’s liability, we look at more than just their duties to repair. Leases often include obligations to decorate, follow legal rules, return the property properly, and reverse any changes made. These terms may appear in the lease or related documents like licences to alter, deeds of variation, or a schedule of condition.

Whether you’re a landlord or tenant, our real estate disputes team can help you understand your rights and guide you through Interim or Terminal Dilapidations claims. 

Interim Dilapidations

Interim dilapidations refers to disrepair caused by a breach of repairing obligations that arise “during” the term of a lease, rather than at its end. Where such breaches occur, landlords have several potential remedies available to them, depending on the terms of the lease and applicable legislation. The landlord’s main remedies are:

 1. Damages

Landlords can claim compensation during a lease if the tenant hasn’t kept the property in good repair. This is usually based upon how much the damage has reduced the property’s value, not the cost of fixing it. This rule is set out in Section 18(1) of the Landlord and Tenant Act 1927. If the lease is for more than seven years (and has more than three years remaining), the landlord’s right to claim damages may be limited by the Leasehold Property (Repairs) Act 1938. This law requires landlords to follow specific steps and, in some cases, get the permission of the court before making a claim. 

 2. Forfeiture 

Landlords may be able to end the lease (forfeiture) if it includes a right to re-enter the property if the tenant breaches its repair obligations. To do this, the landlord must first serve a valid Section 146 Notice under the Law of Property Act 1925, giving the tenant a fair chance to fix the issue. 

If the Leasehold Property (Repairs) Act 1938 applies, the notice must also include specific information about the tenant’s rights. This adds extra steps that can make it harder for landlords to end the lease due to disrepair during the term.

 3. Self-Help: Jervis v Harris Clause 

Many modern commercial leases include what's known as a Jervis v Harris clause. This lets the landlord enter the property during the lease term to carry out repairs if the tenant hasn’t done them. The landlord can usually recover the cost of these repairs from the tenant as a debt, rather than claiming damages. This can benefit landlords, because it can remove some of the limitations imposed upon them by the Landlord and Tenant Act 1927 and the Leasehold Property (Repairs) Act 1938. However, this approach also has risks and downfalls, including: 

  • Significant upfront cost to the landlord 
  • Challenges in recovering the costs (if the tenant becomes insolvent etc)
  • Potential claims of trespass if the clause is not precisely followed 

Schedule of Dilapidations

The first step in both Interim and Terminal Dilapidations claims is preparing and serving a Schedule of Dilapidations. This is usually done by a building surveyor and sets out: 

  1. What the landlord believes the tenant has failed to do under the lease 
  2. What work is needed to put things right 
  3. For Terminal Dilapidations, an estimate of how much it will cost the landlord to carry out the repairs (the cost is not a requirement for interim dilapidations/remedies)

Asserting an Interim Remedy

Once the Schedule has been prepared, the next steps will depend on what the landlord is trying to do — i.e. claim damages, end the lease (forfeiture) or carry out the repairs themselves (step-in rights). This may involve serving:

  1. A pre-action letter of claim that follows the correct legal protocol 
  2. A Section 146 Notice, which may need to explain the tenant’s rights under the Leasehold Property (Repairs) Act (if it applies)
  3. A formal letter with the Schedule, stating the landlord’s plan to use their step-in rights (if allowed by the lease) 

Whichever route is taken, by landlord or tenant, it’s important to get legal advice early. Getting the process wrong can lead to extra costs and legal risks. 

How We Can Help You

Our expert team of real estate disputes lawyers are specialists in both bringing and defending dilapidations claims. Together, our team can assist with the service of the Schedule, negotiating and documenting settlements, preparing and responding to claims, and representing you in court or in ADR processes.

Our team has extensive experience in this area of law, and will carefully listen to your objectives to provide the most practical and cost-effective solution. 

To find out how our expert team of real estate disputes lawyers can help you, contact us today on  0330 123 1229, send us an email via  info@smithpartnership.co.uk or complete our  contact form.