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 has 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 — and most people meet the word for the first time when they’re already in trouble. 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.
Key takeaways
- Dilapidations is a contractual matter — liability comes from the specific repair, reinstatement and decoration covenants in the lease.
- A schedule of condition taken before you sign is a tenant’s single best protection against an open-ended repairing liability.
- Section 18 of the Landlord and Tenant Act 1927 caps damages at the drop in the landlord’s property value — often well below the repair bill.
- Claims typically settle 40–60% below the landlord’s opening figure after professional negotiation.
- Genuine terminal dilapidation payments are outside the scope of VAT (HMRC Brief 2, 2022).
In this guide
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: 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 that covenant inherits liability for every pre-existing defect.
One 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, and estimated costs.
There are three types, and the timing matters:
- Terminal schedule — served near the end of the lease (typically the final 6–12 months). It covers everything: repairs, reinstatement, redecoration and statutory compliance, giving the tenant a chance to do the works themselves before the lease expires and potentially avoid a settlement.
- Interim schedule — served during the lease when the landlord is concerned about maintenance. It focuses on urgent items and doesn’t normally include costings. If ignored, the landlord may pursue forfeiture under Section 146 of the Law of Property Act 1925.
- Final schedule — served after the lease has expired. The tenant can no longer do the works; the only remedy is damages.
The schedule is accompanied by a Quantified Demand — the landlord’s formal financial claim. Crucially, the figure must reflect the landlord’s likely loss, not simply the cost of repairs. That distinction returns 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, the surveyor reviews the lease, any schedule of condition, licences for alterations and previous condition reports — they need to know exactly what the tenant covenanted to do.
The on-site inspection is thorough. Externally: roof coverings, flashings, guttering, external walls, windows, doors, drainage and grounds. Internally: walls, floors, ceilings, doors, fixtures, decorative condition and building services (HVAC, electrical, plumbing, fire safety), with photographic evidence throughout.
For roofs and facades that are hard to access, we use 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 gets a clause reference, a breach description, a remedial-works specification and a cost estimate.
Both sides need their own surveyor: the landlord’s prepares the schedule; the tenant’s reviews it, challenges inflated items and negotiates. It’s adversarial by nature, and claims typically settle 40–60% 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 £500–£1,500+VAT for the surveyor’s inspection and schedule. Larger properties (25,000+ sq ft) typically run £3,000–£10,000+.
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 the South East 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 around £7.27 per sq ft, and BCIS reported (Sept 2025) that dilapidations-related building costs rose 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 routinely achieve 40–60% reductions on the opening figure — on a £200,000 claim, that’s £80,000–£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 point in time — usually prepared before a lease is signed and annexed to it, to cap the tenant’s repair liability.
This is the single most important piece of advice for any tenant taking 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 the property back in better condition than you took it on.
It 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 should include written room-by-room descriptions, timestamped photographs and structural observations; a photographs-only schedule has real limitations, because images alone don’t capture dampness, crack width or the extent of a defect.
Typical costs: £500–£1,500 for small premises, £2,000–£4,000 for standard offices, £5,000–£10,000+ for larger or complex buildings. Where precise dimensional records are needed alongside the condition evidence, a measured building survey can complement it.
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 — so the landlord can’t recover more than their real loss, even if the repair bill is higher.
There are two limbs. The first is the statutory cap: damages can’t exceed the drop in value caused by the disrepair. If the property in good repair is worth £1,000,000 and in its current state £850,000, the landlord recovers a maximum of £150,000 — even if the schedule prices the works at £300,000.
The second is supersession: if the landlord plans to demolish 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 reduced the landlord’s recovery from over £3,000,000 to less than £1,000,000.
One limitation: Section 18 applies to repair covenants. Reinstatement and decoration 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: the 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; and court is 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 is that most claims now settle without litigation, because the Protocol forces structured negotiation and information exchange.
Surveyors’ work in this area is guided by the RICS professional standard ‘Dilapidations in England and Wales’ (7th edition) — first published in 2016 and reissued in December 2023 with elevated regulatory status but no material change of content.
Are Dilapidations Subject to VAT?
No. Genuine dilapidation settlement payments are outside the scope of VAT — 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, which caused significant industry concern. HMRC suspended that guidance in January 2021 and replaced it in February 2022 with Brief 2, confirming the outside-the-scope position.
One caveat: if the landlord can’t recover VAT on the 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 — and the difference almost always comes down to how early you get advice.
For tenants, that means a schedule of condition before the lease starts and a surveyor the moment a claim arrives.
For landlords, it means a properly documented, Protocol-compliant case that stands up to scrutiny. (Note: 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, and can advise as part of wider commercial technical due diligence on an acquisition or lease.
Facing a dilapidations claim — or preparing one?
Frequently Asked Questions
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.
Yes — and they should. Claims typically settle 40–60% below the opening figure after professional negotiation. The landlord’s schedule is their starting position, not the final number.
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.
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.
An interim schedule is served during the lease for urgent repair items. A terminal schedule is served near lease end and covers all obligations — repairs, reinstatement and redecoration.
Almost always. The landlord’s opening schedule is a starting position, not the final figure. Professional negotiation, Section 18 defences and supersession arguments routinely reduce settlements by 40–60%.