Dilapidations in Commercial Property: Claims, Defences & Key Case Law [2025]

This is an area of increasing significance. The course aims to look at some of the areas and in particular at the new legislation on Higher-Risk Buildings and its significance for mixed use developments.

Topics covered include:

1. Introduction

2. What Are Dilapidations?

• Definition & Scope: What constitutes dilapidations in a commercial lease.
• Key Lease Obligations:
  • Repairing covenants
  • Reinstatement obligations
  • Decoration and yielding-up clauses
• The Lease Lifecycle & When Claims Arise:
  • During the term
  • At lease expiry

3. Bringing a Dilapidations Claim

• The Landlord’s Approach:
  • Preparing a Schedule of Dilapidations
  • Section 18(1) of the Landlord and Tenant Act 1927: The "diminution in value" cap
  • Costing the claim: Reasonable costs vs. betterment
  • The role of surveyors and experts
• The Pre-Action Protocol for Claims
  • Timelines and procedural requirements
  • Settlement discussions

4. Defending a Dilapidations Claim

• Common Tenant Defences:
  • No breach occurred (compliance with obligations)
  • The landlord’s intention to redevelop or demolish
  • Section 18(1) diminution argument
  • Works were unnecessary or excessive
• Tactical Considerations:
  • Negotiating a settlement
  • Expert evidence and alternative dispute resolution

5. Key Case Law & Lessons Learned

• Cunliffe v Goodman (1950) – Landlord’s intention and Section 18(1)
• Sunlife Europe Properties Ltd v Tiger Aspect Holdings Ltd (2013) – The extent of a tenant’s liability
• Hanson v The Prudential Assurance Co Ltd (2002) – Betterment and reasonable costs
• Mannai Investment Co Ltd v Eagle Star Assurance Co Ltd (1997) – Notices and compliance with lease terms
• Recent case law updates

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