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Dilapidation Claim

Being a landlord can get tough when tenants don't take care of your property like they're supposed to. It's stressful because not only does it lower your property's value, but it also means you have to fix things before you can rent it out again.

This is what we call dilapidations – basically when tenants don't keep your property in good shape, causing damage or making it unsafe to live in. But here's the good news: there's something called a dilapidation claim. This means you can ask for money to cover the cost of fixing up the place.

At Lawhive, our network of expert property lawyers is on hand to help you make a dilapidation claim.

Contact us today for a free case evaluation with our Legal Assessment Specialists to find out more. 

What are dilapidations?

Dilapidations refer to the legal responsibilities a tenant has to keep leased premises in good condition, as stated in the lease agreement. 

When a tenant rents a commercial or residential property, they must maintain the premises throughout the lease. This includes doing repairs and making sure the property is in good condition when the lease ends. If a tenant doesn’t meet these obligations, the landlord can seek compensation through a dilapidations claim. 

Dilapidations can cover different types of damage or disrepair, such as structural issues, damage to fixtures, failure to fix mechanical or electrical systems, not following safety rules, or neglecting general maintenance. 

The lease agreement usually outlines what a tenant needs to do to keep the property in good condition and how to handle dilapidations.

What is a dilapidation claim?

A dilapidation claim is when a landlord takes legal action against a tenant because the tenant hasn't kept up with repairs or maintenance as agreed in the lease.

This can involve various problems with the property, like structural issues, damage to fixtures, not taking care of mechanical or electrical systems, or neglecting general maintenance.

There are two main types of dilapidation claims: terminal dilapidations, which happen at the end of the lease, and interim dilapidations, which can come up during the lease term.

What is a terminal dilapidation claim?

A terminal dilapidation claim, also called a terminal claim, is a claim that a landlord makes against a tenant when their lease is ending.

Suppose a landlord does a final check of the property at the end of the lease and finds things that need fixing, like structural problems. In that case, they can make a terminal dilapidation claim to ask the tenant for money to cover the cost of fixing these issues. This usually includes the cost of materials, workers, and any professionals needed to do the repairs.

Terminal dilapidation claims usually cover the cost of repairs, any loss of rent while repairs are being carried out, and sometimes professional fees.

The goal of a terminal dilapidation claim is to get the landlord back to where they would have been if the tenant had followed the repair rules in the lease.

What is an interim dilapidation claim?

An interim dilapidation claim is like a terminal dilapidation claim, but it happens while the lease is ongoing, not just at the end. This happens when the landlord notices problems with the property's condition and asks the tenant to fix them or pay for repairs before the lease is up.

This type of claim makes sure that the property stays in good shape during the lease, instead of waiting until the end to deal with any issues. A secondary benefit to an interim dilapidation claim is that it can avoid potential defenses like section 18 at the end of the lease, which can reduce the claim. 

If a tenant refuses to make repairs during the lease, landlords may have the right to step in and do the repairs themselves, charging the costs to the tenant.

Other options for dealing with interim dilapidations might also include the landlord seeking to end the lease or getting a court order to force the tenant to do repairs. 

What is a schedule of dilapidations?

A schedule of dilapidations is a formal document made by a landlord or their surveyor, showing what needs fixing in a property when a lease ends. This is an important part of starting a claim for terminal dilapidations.

This document lists all the areas of the property that need repairs or maintenance. It covers things like structural problems, damage to fixtures, or not taking care of the inside or outside of the building.

Usually, photos are included to show how bad the problems are. This helps everyone understand what needs fixing. The schedule might also include quotes from contractors, showing how much it'll cost to do the repairs. This helps figure out how much money the tenant might need to pay.

Once the schedule is ready, it's served to the tenant, who can respond. They might argue about what's listed or try to negotiate the repairs or how much they'll have to pay.

How can tenants try to limit a dilapidation claim? 

Tenants may try to limit a landlord’s damages claim or reduce their liability using Section 18 of the Landlord and Tenant Act 1927.

According to Section 18, repair costs claimed can’t be more than the decrease in the property’s value. What’s more, no repair costs can be claimed if the building is to be demolished or if structural changes will make the repairs useless. 

Both landlords and tenants can get a Section 18 Valuation from a surveyor to understand how this defense might affect a terminal dilapidations claim. In some cases, it can make a big difference and sometimes reduce the claim to nothing. 

Dilapidation and UK law

In the UK, dilapidation is governed by common law principles and contractual agreements between landlords and tenants. This includes:

• Landlord and Tenant Act 1927: Outlines the landlord's right to claim damages for dilapidations at the end of a lease term. Section 18 of the act specifically addresses the landlord's right to recover costs for repairs or reinstatement of the property.

• Landlord and Tenant Act 1954: While primarily dealing with commercial leases, this act contains provisions related to repair and maintenance obligations. Section 24 of the act, in particular, addresses the tenant's responsibility to maintain the premises in a good state of repair.

• Housing Act 1988: This act contains provisions related to residential tenancies, including the landlord's obligations for repairing the structure and exterior of the property under Section 11.

Who can bring a dilapidation claim?

A dilapidation claim is usually brought by the landlord against the tenant because it's the tenant's job, according to the lease, to keep the property in good shape during the lease. If the property gets damaged or falls into disrepair beyond normal wear and tear, the landlord can ask for money to fix it.

However, the landlord needs to prove that the damage happened during the lease and wasn't there before the tenant moved in. To do this, landlords often hire a surveyor to check the property near the end of the lease and find any problems with maintenance or repairs.

While landlords are the ones usually making dilapidation claims, tenants have rights too. If a landlord doesn't do their part in fixing things or maintaining the property, tenants might be able to make a counterclaim or ask for compensation for any losses they suffer because the landlord fails to keep up their end of the deal.

What evidence do you need for a dilapidation claim?

For a successful dilapidations claim, landlords need to gather enough evidence to show that the property has fallen into disrepair or has been damaged beyond normal wear and tear during the tenant's occupation. 

These pieces of evidence could include:

• Lease agreement: Outlining the tenant's responsibilities regarding maintenance, repair, and condition of the property. Any breaches of these obligations can form the basis of the claim.

• Schedule of Dilapidations: This document is usually prepared by a surveyor and details the specific areas of the property that require repair or reinstatement. It should include photographs, descriptions, and estimated costs for each item of disrepair.

• Dilapidation survey report: Conducted by a qualified surveyor providing an independent assessment of the property's condition. The report should identify any breaches of the lease regarding maintenance and repairs and provide evidence to support the landlord's claim.

• Maintenance records: Showing the history of maintenance and repairs carried out on the property can be valuable evidence. This may include invoices, receipts, work orders, and correspondence with contractors.

• Before and after photographs: Taken before the tenant's occupation and at the end of the lease term can help demonstrate the extent of any deterioration or damage. Visual evidence is often compelling in dilapidation claims.

• Estimates and invoices: From contractors for the cost of repairing the identified dilapidations and invoices for any work already completed can serve as evidence of the financial loss incurred by the landlord.

• Correspondence and notices: Between the landlord and tenant regarding maintenance issues, requests for repairs, or notices of breaches of the lease should be retained as evidence.

Sometimes, expert testimony from surveyors or engineers might be needed, especially for complex issues or disputes over the extent of the dilapidations. 

What is the dilapidation protocol?

The dilapidations protocol is a set of guidelines in the UK aimed at helping landlords and tenants resolve dilapidations disputes fairly and efficiently.

It encourages early communication, transparency, and cooperation between the parties involved, to avoid costly and lengthy legal battles.

The protocol outlines steps that landlords and tenants should take before going to court, like giving notice of potential claims, sharing information, and trying to settle through negotiation or mediation.

Although it's not legally required to follow the protocol, failing to do so could have consequences in court. Judges might consider whether the parties followed the protocol when deciding on issues like costs and who's responsible for what.

When should a landlord make a dilapidations claim?

A landlord should consider making a dilapidations claim against a tenant if they believe the property has suffered damage or deterioration beyond normal wear and tear during the tenant's stay.

Typically, landlords will assess the property's condition near the end of the lease or shortly after the tenant moves out. This is a good time to spot any issues and begin the claims process.

However, landlords can also opt to conduct regular inspections during the lease term to check the property's condition. If they find significant problems during these inspections, they can start a dilapidations claim right away.

When should a schedule of dilapidations be served?

It's typical for landlords to give tenants the schedule of dilapidations toward the end of the lease when the tenant's right to be in the property is ending. This gives the tenant enough time to deal with any problems before giving up the lease.

If the tenant has already left before the lease ends, the landlord might send the schedule of dilapidations soon after the tenant moves out. This lets the landlord check the property's condition right away and find any issues.

How to make a dilapidation claim

To make a dilapidation claim, follow these steps: 

• Conduct a thorough inspection of the property and identify any arrears in need of repair or maintenance. You may also consider hiring a qualified surveyor to get a detailed assessment. 

• Based on the inspection findings, prepare the Schedule of Dilapidations detailing what needs fixing. Include photos, descriptions, and cost estimates for repairs. 

• Make sure the claims in the schedule align with the lease terms and contractual provisions. 

• Serve the Schedule of Dilapidations to the tenant and give them a reasonable time to respond and carry out repairs. 

• Try to discuss and negotiate with the tenant first to see if you can reach a resolution you are satisfied with. 

• If negotiation fails, you might explore Alternative Dispute Resolution like mediation or arbitration as faster and less costly alternatives to court. 

• Consider consulting a property solicitor for guidance on the legal aspects and procedural steps involved in making a dilapidations claim. 

What is the section 18 cap?

The Section 18 cap is a legal limit on the damages a landlord can claim from a tenant for breaching repair obligations under Section 18 of the Landlord and Tenant Act 1927. In simple terms, it means that the landlord can only claim the amount equal to the drop in the property's value because of the damage. So, they can't ask for more money than what the property has lost in value due to disrepair. This cap ensures landlords are fairly compensated for losses caused by the tenant's breach of repair duties, without allowing them to recover more than the actual decrease in the property's value.

How does a Section 18 cap affect dilapidations?

The Section 18 cap has a significant impact on dilapidations because it restricts the amount of money a landlord can seek from a tenant for breaching repair obligations in the lease agreement. Essentially, the landlord can only claim damages up to the decrease in the property's value caused by the disrepair. For instance, if the property's value has dropped by £10,000 due to dilapidations from the tenant's neglect, the landlord's damages claim under Section 18 cannot surpass this amount. Even if the repair costs exceed £10,000, the landlord is constrained by the Section 18 cap regarding the amount they can recover from the tenant.

Can landlords claim for loss of rent?

Yes, landlords have the right to include loss of rent as part of a dilapidations claim, especially if the property's condition has hindered its re-letting to a new tenant. To support this claim, landlords must demonstrate a clear connection between the dilapidations and the loss of rental income. Essentially, the disrepair must directly contribute to the property's inability to be re-let or generate rental revenue.

How long does a landlord have to make a dilapidations claim?

There isn't a specific time frame or limit for a landlord to make a dilapidations claim against a tenant. However, the timing might be influenced by contractual agreements, common law principles, and practical considerations. 

Firstly, the lease agreement between the landlord and tenant might specify deadlines or timeframes within which dilapidations claims must be made. Landlords need to review the lease carefully and make sure they follow these timeframes. 

Landlords also need to consider practical factors such as the availability of evidence, the feasibility of carrying out repairs, and the potential for negotiation with the tenant when working out the timing of a dilapidations claim.

Can tenants challenge a dilapidations claim?

Yes, tenants have the right to challenge the landlord's allegations of dilapidations by presenting evidence to counter the claims. This evidence could include demonstrating that the property was in good repair at the end of the lease term, proving that the alleged dilapidations existed before the start of the tenancy, or showing that the landlord's claims are exaggerated or unfounded. To navigate this process effectively, tenants should seek legal advice from a solicitor specialising in property law. A solicitor can assess the merits of the landlord's dilapidations claim and advise on the best course of action to take in response.

How to respond to a dilapidation claim

Tenants need to respond quickly and appropriately to any dilapidations claim.

By challenging unjustified or excessive dilapidations claims, tenants can seek to minimise their financial liability and resolve disputes fairly and equitably.

You should prepare a written response to the dilapidation claim, addressing each allegation made. Provide explanations, evidence, and any relevant documentation to support your position.

To do this, you might decide to conduct your own inspection of the property to identify any inaccuracies in the dilapidation claim and document the condition of the property. You should also review the lease agreement to determine whether the claims made by the landlord meet the terms of the lease. 

Make sure that you respond to the dilapidation claim within any deadlines specified by the landlord or required under the lease agreement. Failure to respond on time may result in further legal action being taken against you.

What if we cannot reach an agreement on a dilapidations claim?

If negotiations and informal methods fail to resolve a dilapidations claim, tenants and landlords have several options to consider:

Mediation

This involves an independent mediator facilitating discussions between the parties to reach a mutually acceptable resolution.

Mediation can be less adversarial and costly than litigation, offering a chance for both parties to voice their concerns and find common ground.

Expert Determination

Parties may opt to submit the dispute to an independent expert for a decision. The expert evaluates evidence and issues a binding decision based on their expertise.

While quicker and cheaper than litigation, both parties must agree to stand by the expert's decision.

Court Proceedings

If all else fails, either party can resort to litigation. This formal legal process involves presenting the case before a judge, who will issue a judgment based on the evidence and arguments presented.

Litigation can be time-consuming and costly but provides a final resolution to the dispute. Each option has its advantages and drawbacks, and the best course of action will depend on the specific circumstances of the dilapidations claim.

Seeking legal advice can help tenants and landlords navigate these options and choose the most appropriate path forward.

Do I need a solicitor for a dilapidation claim?

Whether or not you need a solicitor for a dilapidation claim depends on the complexity of the situation, your familiarity with legal processes, and your comfort level with negotiating and resolving disputes.

If you are unfamiliar with property law, contract law, or the procedures involved in resolving dilapidations disputes, a solicitor can provide valuable expertise and representation. 

A solicitor specialising in property law will have the necessary knowledge and experience to advise you on the best course of action and advocate on your behalf throughout the claims process.

Does VAT apply to a dilapidations claim?

VAT is generally applicable to most goods and services provided by VAT-registered contractors or suppliers, including building and maintenance services. This means that the cost of repairs or remedial works may be subject to VAT. If either the landlord or tenant is VAT-registered, they may be able to recover the VAT incurred on the costs of repairs or works as input tax. This can help reduce the overall financial impact of the dilapidations claim on the VAT-registered party. Some types of works may be exempt from VAT or eligible for zero-rating, depending on their nature and purpose. For example, certain alterations or improvements to a property may qualify for zero-rated VAT treatment, while others may be entirely exempt from VAT. The liability for VAT on dilapidations claims depends on the specific circumstances of the case and the contractual agreements between the parties. It's essential to review the lease agreement and seek professional advice to determine the VAT implications accurately. VAT may also apply to professional fees incurred in relation to the dilapidations claim, such as fees charged by solicitors, surveyors, or other professionals involved in the process. These fees are typically subject to VAT at the standard rate.

Who pays for a dilapidations claim?

The responsibility for paying a dilapidations claim typically falls on the tenant, as it relates to breaches of repair and maintenance obligations under the lease agreement. 

However, the specific financial liability for the dilapidations claim depends on various factors, including the terms of the lease agreement, the nature and extent of the dilapidations, and any negotiations or legal proceedings that may occur.

If negotiations between the landlord and tenant are unsuccessful throughout the claim, the matter may escalate to legal proceedings, such as court proceedings or alternative dispute resolution methods. In such cases, the court or arbitrator may determine the financial liability for the dilapidations claim based on the evidence presented and the applicable legal principles.

Get expert legal advice on dilapidation claims 

At Lawhive, our network of expert property lawyers is on hand to provide tailored advice and outline all available options based on your circumstances and objectives. 

For further information and a free case evaluation regarding making a dilapidation claim, contact our legal assessment team today.