Dilapidations Survey: What It Is, What It Costs, and When You Need One
Your lease is ending in six months.
Or maybe a thick document just landed on your desk with “Schedule of Dilapidations” across the top and a six-figure sum at the bottom.
Either way, you’re now dealing with dilapidations. Most people encounter this word for the first time when they’re already in trouble.
And the stakes are real: commercial dilapidations claims commonly range from £5,000 to well over £1,000,000.
Whether you’re a landlord preparing a claim or a tenant who’s just received one, a dilapidations survey is where the process starts. This is what actually happens.
What Does Dilapidations Mean?
Dilapidations is the legal term for breaches of a commercial tenant’s lease obligations relating to the property’s physical condition, covering repairs, reinstatement of alterations, and redecoration.
It’s a contractual issue, not a general term for disrepair. The tenant’s liability comes from specific covenants written into the lease itself. And the wording matters enormously.
A covenant “to keep in repair” means you maintain the property throughout the term. That’s manageable. But “to put and keep in repair” is a different beast altogether. That second version means you first put the premises into repair (even if they were already falling apart when you moved in) and then maintain them.
A tenant taking on a tired building under this covenant inherits liability for every pre-existing defect.
One quick clarification: this is commercial property law. If you’re a residential tenant worried about your deposit, that’s a completely different regime under the Housing Act 2004. The Dilapidations Protocol doesn’t apply to residential disputes.
What Is a Schedule of Dilapidations?
A schedule of dilapidations is a formal document listing every alleged breach of the tenant’s lease obligations, the remedial works required for each breach, and estimated costs.
There are three types, and the timing matters.
A terminal schedule is served near the end of the lease, typically in the final 6 to 12 months. It covers everything: repairs, reinstatement of alterations, redecoration, and statutory compliance. The purpose is to give the tenant a chance to carry out the works themselves before the lease expires, potentially avoiding a financial settlement.
An interim schedule is served during the lease when the landlord is concerned about maintenance. It focuses on urgent items only and doesn’t normally include costings or cosmetic issues. If ignored, the landlord may pursue forfeiture under Section 146 of the Law of Property Act 1925.
A final schedule comes after the lease has expired. The tenant can no longer do any works at this point. The only remedy is damages.
The schedule is accompanied by a Quantified Demand, which is the landlord’s formal financial claim. The figure must reflect the landlord’s likely loss, not simply the cost of repairs. That distinction is important and comes up again under Section 18.
What Happens During a Dilapidations Survey?
A chartered building surveyor inspects the property room by room, compares what they find against the specific lease obligations, and produces a schedule identifying every breach, the required fix, and an estimated cost.
Before arriving on site, the surveyor reviews the lease, any schedule of condition, licences for alterations, and previous condition reports. They need to understand exactly what the tenant covenanted to do.
The on-site inspection is thorough. Externally: roof coverings, flashings, guttering, external walls, windows, doors, drainage, grounds. Internally: walls, floors, ceilings, doors, fixtures, decorative condition, building services (HVAC, electrical, plumbing, fire safety). Photographic evidence throughout.
For roofs and facades that are difficult to access, Blackacre uses drone surveys and 3D laser scanning for precise measurement and recording.
Back in the office, each finding is mapped against the relevant lease covenant. Every item in the schedule gets a clause reference, breach description, remedial works specification, and cost estimate.
Both sides need their own surveyor. The landlord’s surveyor prepares the schedule. The tenant’s surveyor reviews it, challenges inflated items, and negotiates.
This is adversarial by nature, and claims typically settle at 40 to 60% below the opening figure after professional negotiation.
How Much Does a Dilapidations Survey Cost?
For a small to medium commercial property (under 5,000 sq ft), expect to pay £500 to £1,500+VAT for the surveyor’s inspection and schedule. Larger properties (25,000+ sq ft) typically run £3,000 to £10,000+.
What affects the fee?
Property size is the biggest factor, but complexity, urgency, and whether specialist M&E or drone surveys are needed all play a part. London and Southeast fees sit at the higher end of these ranges.
Some context on what you’re protecting against: RICS data suggests the average cost of settling an industrial dilapidations claim runs approximately £7.27 per sq ft. BCIS reported (Sept 2025) that dilapidations-related building costs increased by 10.09% between Q2 2023 and Q2 2025. Claims are getting more expensive, not less.
The cost of not getting professional advice is almost always higher.
Tenants who engage a surveyor to review and negotiate a claim routinely achieve reductions of 40 to 60% on the landlord’s opening figure.
On a £200,000 claim, that’s £80,000 to £120,000 saved.
What Is a Schedule of Condition and Why Does It Matter?
A schedule of condition is a detailed record of a property’s state at a specific point in time, usually prepared before a lease is signed and annexed to the lease to cap the tenant’s repair liability.
This is the single most important piece of advice for any tenant taking on a commercial lease: get a schedule of condition before you sign. Without one, a standard FRI (full repairing and insuring) lease could leave you liable to hand back the property in better condition than when you took it on.
The schedule must be formally referenced in the lease covenants and physically annexed to the lease document.
An unsigned schedule “on file” with your solicitor isn’t enough. It must include written room-by-room descriptions, timestamped photographs, and structural observations.
A photographic-only schedule (without written descriptions) has significant limitations because photographs alone don’t capture dampness, crack width, or the extent of specific defects.
Typical costs: £500 to £1,500 for small premises, £2,000 to £4,000 for standard offices, £5,000 to £10,000+ for larger or complex buildings. If your property requires precise dimensional records alongside condition evidence, a measured building survey can complement the schedule of condition.
What Is the Section 18 Cap?
Section 18 of the Landlord and Tenant Act 1927 caps dilapidations damages at the amount the landlord’s property value has actually diminished, meaning the landlord can’t claim more than their real loss, even if the repair bill is higher.
Two limbs to understand here.
The first limb is the statutory cap.
The landlord’s damages can’t exceed the drop in property value caused by the disrepair. So if the property in good repair is worth £1,000,000 and in its current state it’s worth £850,000, the landlord recovers a maximum of £150,000. Even if the schedule of dilapidations prices the works at £300,000.
The second limb is supersession. If the landlord plans to demolish the building or carry out structural alterations that would make the tenant’s repairs worthless, the tenant owes nothing for those items. Partial supersession is possible too.
In Hammersmatch v Saint-Gobain [2013], Section 18 dramatically reduced the landlord’s recovery from over £3,000,000 to less than £1,000,000.
One important limitation: Section 18 applies to repair covenants. Reinstatement and decoration covenants are assessed differently, though diminution principles often apply in practice at common law.
What Is the Dilapidations Protocol?
The Dilapidations Protocol is a formal pre-action process under the Civil Procedure Rules that both parties must follow before any court proceedings, designed to encourage early settlement and reduce litigation costs.
The timeline runs like this: landlord serves the schedule and quantified demand within 56 days of lease end. The tenant responds within 56 days after that. Without-prejudice meetings follow within 28 days. ADR is considered at every stage. Court proceedings are a last resort.
Non-compliance risks adverse costs orders. You can win the substantive claim and still be ordered to pay the other side’s costs if you didn’t follow the Protocol properly. The practical effect? Most claims now settle without litigation because the Protocol forces structured negotiation and information exchange.
The current process is governed by the RICS Professional Standard “Dilapidations in England and Wales,” 7th edition (originally published September 2016, reissued December 2023 with elevated regulatory status but no material content changes).
Are Dilapidations Subject to VAT?
No. Dilapidation settlement payments are outside the scope of VAT. This was confirmed by HMRC in Revenue and Customs Brief 2 (2022), effective 1 April 2022.
There was a scare in 2020 when HMRC’s Brief 12 suggested dilapidation payments might become subject to VAT. That caused significant industry concern. HMRC suspended the guidance in January 2021 and replaced it in February 2022 with Brief 2, confirming the outside-the-scope position.
One caveat worth knowing: if the landlord can’t recover VAT on subsequent repair works (because they haven’t opted to tax the building), they may include an allowance for irrecoverable VAT in the settlement figure. That’s compensation for their cost, not VAT on the payment itself.
No VAT invoice should be issued for a dilapidation settlement.
Get Professional Advice Early
Dilapidations can be a six-figure liability or a manageable process. The difference almost always comes down to how early you get professional advice. For tenants, that means getting a schedule of condition before the lease starts and engaging a surveyor the moment a claim arrives. For landlords, it means building a properly documented, Protocol-compliant case that will stand up to scrutiny.
The Law Commission announced in September 2025 that it will review how commercial leasehold maintenance and repair law works. Reform may come, but current obligations still apply in full.
Blackacre acts for both landlords and tenants on dilapidations across London, Surrey, and Sussex. Contact us early.
Frequently Asked Questions
How long does a landlord have to claim dilapidations?
Six years from the date of the breach under the Limitation Act 1980. For a terminal claim, time starts running when the lease expires. Don’t assume a delay means the landlord has forgotten.
Can a tenant dispute a dilapidations claim?
Yes, and they should. Claims typically settle at 40 to 60% below the opening figure after professional negotiation. The landlord’s schedule is their starting position, not the final number.
What happens if you ignore a dilapidations claim?
The landlord can proceed to court. Ignoring the Protocol timeline damages your position on costs, and the court can draw adverse inferences from non-engagement. Even if you think the claim is exaggerated, respond within the 56-day window.
Do I need a surveyor for dilapidations?
You don’t legally have to appoint one, but representing yourself against a professionally prepared schedule is like defending yourself in court. The surveyor’s fee typically pays for itself many times over through negotiated reductions.
What is the difference between interim and terminal dilapidations?
An interim schedule is served during the lease for urgent repair items. A terminal schedule is served near lease end covering all obligations including repairs, reinstatement, and redecoration.
Are dilapidations negotiable?
Almost always. The landlord’s opening schedule is their starting position, not the final figure. Professional negotiation, Section 18 defences, and supersession arguments routinely reduce settlements by 40 to 60%.