Dilapidations Explained: What Commercial Tenants and Landlords Need to Know

14 Jan 2026

Dilapidations are a common source of dispute at the end of a commercial lease. They can involve significant sums of money and often come as an unwelcome surprise to tenants and any future business plans of the tenant, having believed they had left a property in reasonable condition and could move on to the next venture free from concern over the vacated property. Understanding what dilapidations cover and how claims are assessed is essential for both landlords and tenants navigating the end of a lease.

At their core, dilapidations are about whether a tenant has complied with their repairing obligations in the lease regarding the property’s physical condition and understanding the burden placed on the tenant by the wording of the repairing obligation. These will vary from lease to lease, and it is important that the legal advisor acting at the inception of the lease, whether acting for a landlord or tenant, understands fully the intentions of each party in respect of the repairing liability of the tenant. What a landlord can legitimately claim, and what a tenant is required to put right or pay for, depends almost entirely on these negotiations and the wording incorporated at this time .

What Are Dilapidations?

Dilapidations are the repairs, maintenance, decorating, reinstatement works, or statutory compliance obligations that a tenant may be required to carry out (or pay for) under a commercial lease if it is found that the tenant has not kept the property in the state and condition required by the lease. These breaches are usually identified when a lease is nearing its end or has already expired, although interim claims can sometimes be made during the term.

A landlord may either require the works to be carried out by the tenant before the lease ends or recover the cost of carrying out those works themselves once the tenant has vacated.

Repair Obligations Under the Lease

Most commercial leases require the tenant to keep the property in repair. The extent of that obligation can vary widely depending on the wording contained within the tenant’s repairing obligation. Some leases impose a full repairing obligation, meaning the tenant must put the property into good repair and keep it in good repair, regardless of its condition at the start of the lease. Others limit the obligation by reference to the property’s initial condition, quite often by referencing the state of repair and condition of the property to a schedule of condition prepared at commencement of the lease

Repair does not only relate to major structural issues. It can also include worn flooring, damaged ceilings, broken fixtures, defective services, or deterioration due to lack of maintenance. Whether something constitutes disrepair rather than fair wear and tear is often a key point of dispute.

Decoration Requirements

Commercial leases commonly require tenants to decorate the property at specified intervals and again just before the end of the lease, usually in the last 6 months and using colours and materials previously approved by the landlord. These obligations may apply only to internal areas or extend to external areas of the building, depending on the lease terms and how the property has been defined.

Failure to carry out required decoration works can form part of a dilapidations claim, even if the property is otherwise in reasonable condition. It is important for a tenant to make the link between the definition of the property and the repairing obligation and how this might affect their future repairing obligations. Having a clear understanding of those parts of the property for which you are responsible is key, whether you are a landlord or tenant, and your solicitor should guide you closely here.

Reinstatement of Alterations

Tenants frequently carry out alterations to suit their business needs, such as installing partition walls, additional cabling, signage, mezzanine floors or kitchen facilities. Leases often require the tenant to reinstate the property to its original layout at the end of the tenancy.

Where alterations were carried out under a licence for alterations, that document will usually set out specific reinstatement obligations, to include making good any damage cause to the building in undertaking those works. If reinstatement is required but not carried out, the landlord may include the cost of those works in a dilapidations claim.

Compliance With Statutory Requirements

Many leases place the responsibility on the tenant to ensure the property complies with relevant statutory requirements throughout the term. This can include obligations relating to fire safety, asbestos management, electrical testing and other health and safety regulations.

If compliance has not been maintained, remedial works or investigations may be included in a dilapidations schedule, even if the tenant was unaware of the issue during occupation.

The Dilapidations Process in Practice

The process typically begins with the landlord or their surveyor preparing a schedule of dilapidations. This document lists outstanding reinstatement, repair, legal compliance and decoration items to the property, identifying remedial work required, and may include cost estimates for the remedial works.

If the tenant fails to complete the works before the lease ends, the landlord may pursue a monetary claim for damages. This is often referred to as a quantified demand and may include the cost of the works, professional fees, and, in some cases, loss of rent. The schedule of dilapidations and a quantified demand should be received by the tenant within 56 days after the end of the lease and the tenant will have an opportunity to respond to the quantified demand within 56 days of receipt from the landlord with the parties often settling on a figure reasonably acceptable to both the landlord and tenant. Where the parties cannot agree, the Dilapidations Protocol states that the parties should consider alternative dispute resolution before going to the courts.

Limits on a Landlord’s Claim

The law places an essential restriction on dilapidations claims for disrepair. Under section 18(1) of the Landlord and Tenant Act 1927, damages are capped at the amount by which the disrepair has reduced the value of the landlord’s interest in the property.

This means a landlord cannot automatically recover the full cost of repairs if the works would not increase the property’s value. For example, where a building is to be redeveloped or substantially altered, the impact of disrepair on value may be minimal.

The Importance of a Schedule of Condition

One of the most effective ways for tenants to limit dilapidations exposure is to agree a schedule of condition at the start of the lease. This is usually a photographic record of the property’s condition at the commencement of the lease.

When properly incorporated into the lease, a schedule of condition can limit the tenant’s repairing obligations, so the tenant is not required to put the property into a better state of repair and condition than it was at the outset.

Managing Risk and Avoiding Disputes

Dilapidations are highly technical and often require both legal and surveying expertise. Early engagement, careful review of lease obligations and realistic negotiation can make a significant difference to the outcome.

Whether acting as a landlord or a tenant, obtaining advice from a solicitor at an early stage can clarify obligations, assess risk, and avoid unnecessary costs and disputes when a lease comes to an end.