A schedule of dilapidations is a document, normally prepared by the landlord’s surveyor, which sets out the alleged breaches of a tenant’s obligations under a commercial lease, the works considered necessary to remedy each breach and, where appropriate, the cost of those works. It may be served during the lease as an interim schedule, or at or after the end of the lease as a terminal schedule. This guide explains what a schedule contains, how the Dilapidations Protocol and the Quantified Demand work, and how tenants should respond.
This guide is general information for commercial property in England and Wales, not legal advice. Landlords and tenants should obtain advice from a solicitor on their own lease.
What is a schedule of dilapidations?
Dilapidations are breaches of a tenant’s obligations under a commercial lease relating to the condition, repair, reinstatement or decoration of the property. A schedule of dilapidations records those alleged breaches item by item.
A schedule of dilapidations should not list everything that is wrong with a building. Each item should be linked to a specific obligation in the lease, supported by evidence and considered against the landlord’s intentions for the property. A building can have a defect that does not give rise to a recoverable claim.
Schedules commonly deal with three categories:
- Repair – bringing the property back into the condition required by the lease.
- Reinstatement – removing alterations, fit-out or tenant improvements where the lease requires it.
- Redecoration – carrying out internal or external decoration in line with the lease.
Interim and terminal schedules
Interim schedules
An interim schedule is served during the lease, where the landlord wishes breaches to be put right while the tenant remains in occupation. The landlord’s remedies depend on the lease wording; some leases allow the landlord to enter, carry out the works and recover the cost.
For leases originally granted for seven years or more with at least three years left to run, the Leasehold Property (Repairs) Act 1938 allows the tenant to serve a counter-notice, after which the landlord needs the court’s permission to pursue damages or forfeiture for disrepair. Legal advice should be obtained promptly if an interim schedule is received.
Terminal schedules
A terminal schedule relates to the tenant’s obligations at the end of the lease, and the Dilapidations Protocol applies to these claims, not to interim schedules. Landlords often serve a schedule in the final months of the lease, giving the tenant an opportunity to carry out works before it leaves. The Protocol then expects the landlord to confirm at termination that the position remains as stated, or to send an updated schedule.
What a schedule of dilapidations contains
The Dilapidations Protocol expects the schedule to set out the breaches the landlord considers have occurred, the works required to remedy them and, where relevant, the landlord’s costings. Items should be separated into categories, such as repair, reinstatement and redecoration.
The model schedule annexed to the Protocol uses the following columns:
| Item No. | Clause No. | Breach complained of | Remedial works required | Landlord’s costings |
|---|---|---|---|---|
| 1 | The lease clause relied on | What is said to be wrong | The works said to remedy it | The estimated cost |
The schedule should be endorsed by the landlord or its surveyor. The endorsement confirms, in summary, that the works are reasonably required to remedy the breaches, that full account has been taken of the landlord’s intentions for the property, and that any costings are reasonable.
The Scott Schedule format
As a claim progresses, further columns are added for the tenant’s comments and costings, the landlord’s reply and any agreed figures. This expanded document is commonly known as a Scott Schedule. The Protocol does not use the term, but the format shows at a glance which items are agreed, which are disputed on liability and which only on cost.
The Quantified Demand
The schedule describes the alleged breaches. The Quantified Demand sets out the money the landlord is actually claiming. Under the Protocol, it should:
- set out clearly all aspects of the dispute
- set out and substantiate the sum sought as damages for the breaches in the schedule, and any other items of loss claimed
- state whether VAT applies
- be restricted to the landlord’s likely loss
- exclude works likely to be superseded by the landlord’s intentions for the property
Where the sum is based on the cost of works, it should be fully quantified and substantiated by an invoice or a detailed estimate.
Dilapidations Protocol timescales
The Protocol’s timescales are guidelines, not fixed deadlines, but the court will take account of the parties’ compliance when deciding who should pay costs.
| Step | Who | Protocol guideline |
|---|---|---|
| Schedule of dilapidations | Landlord | Within a reasonable time, generally within 56 days after the tenancy ends |
| Quantified Demand | Landlord | Within the same timescale as the schedule |
| Response | Tenant | Within a reasonable time, usually within 56 days after the Quantified Demand is sent |
| Meeting | Both parties | Generally within 28 days after the tenant’s response, and the parties are encouraged to meet earlier |
| Alternative dispute resolution | Both parties | To be considered before proceedings are issued |
Before issuing proceedings, the landlord is also expected to quantify its loss with a detailed breakdown based on either a formal diminution valuation or an account of its actual expenditure.
How tenants should respond
A schedule of dilapidations is the landlord’s opening position and not necessarily the amount that will ultimately be payable. A measured response will usually involve the following steps:
- Note the dates. Identify when the schedule and Quantified Demand were sent.
- Gather the documents. Collect the lease, any licences for alterations, any schedule of condition, photographs and records of repairs and maintenance.
- Obtain professional advice. Instruct a surveyor to review the schedule and a solicitor to advise on the legal issues.
- Respond item by item. The Protocol expects the tenant to respond using the landlord’s schedule, explaining its view on each item.
- Endorse the response. The tenant or its surveyor confirms that the works and costs in the response are reasonable and that account has been taken of the landlord’s likely intentions.
- Raise supersession and diminution. If items are likely to be superseded by the landlord’s own works or intentions, this should be stated. A tenant relying on a diminution defence must state its case and provide a diminution valuation.
From a surveying perspective, a careful review may identify items that are:
- not required by the lease
- excessive or disproportionate
- already addressed by previous works
- subject to a schedule of condition
- unsupported by appropriate evidence
- inappropriate given the landlord’s intentions for the property
A schedule of condition survey annexed to the lease at the outset may limit the tenant’s obligations to the condition recorded at the start. Our guide to FRI lease tenant protection explains the other steps tenants can take during the lease.
Section 18(1) of the Landlord and Tenant Act 1927 in brief
Section 18(1) of the Landlord and Tenant Act 1927 places two important limits on damages for breach of a repairing covenant:
- The diminution cap. Damages cannot exceed the amount by which the value of the landlord’s reversion is reduced by the breach.
- The supersession limb. No damages are recoverable for failing to leave the premises in repair if the premises would, at or shortly after the end of the tenancy, be pulled down or structurally altered in a way that would make those repairs valueless.
Section 18(1) applies to repairing covenants. Reinstatement and other items are assessed differently, and the precise position will depend on the lease and the facts. Diminution is a valuation question, so specialist valuation evidence and legal advice are normally required.
How an RICS Chartered Surveyor can help
An RICS Chartered Surveyor can combine an understanding of building pathology and repair costs with the practical application of commercial lease obligations. For landlords, our RICS Chartered Surveyors can inspect the property, review the lease and prepare a Protocol-compliant schedule of dilapidations, taking account of the landlord’s intentions for the building. For tenants, we can review the landlord’s schedule and Quantified Demand, assess each item against the lease and negotiate with the landlord’s surveyor. Our dilapidations surveyor page explains the service in full.
Where a tenant needs a figure before a claim arrives, for budgeting or year-end accounts, a dilapidations liability assessment can provide an independent, costed estimate for the tenant’s accountant to consider.
Every claim turns on its own lease and facts. Our dilapidations case study describes a £1,600,000 terminal claim against a tenant that was settled for £320,000.
Frequently asked questions
Is the figure in the schedule the amount the tenant must pay?
Not necessarily. The schedule and Quantified Demand represent the landlord’s claim. The amount payable may be reduced by the lease wording, the evidence, the landlord’s intentions and the section 18(1) cap.
How long does a tenant have to respond?
The Protocol expects a response within a reasonable time, usually within 56 days after the landlord sends the Quantified Demand.
Does the Dilapidations Protocol apply in Scotland or Northern Ireland?
No. The Protocol applies to commercial property in England and Wales. Advice should be taken locally for property elsewhere.
Received a schedule of dilapidations?
If you have received a schedule of dilapidations, or are preparing one, early advice can make a considerable difference. Call 0151 374 0905 or email office@lansdownassociates.co.uk (Monday to Friday, 09:00 to 17:00).
