Dilapidations in England and Wales: RICS Dilapidations Protocol
In England and Wales, the term dilapidations refers to the state of disrepair or breaches of lease obligations that a tenant may be responsible for addressing, usually at the end of a tenancy.
This is particularly relevant for commercial properties, where the costs associated with dilapidations can be significant.
To ensure fairness and consistency in resolving these matters, the Dilapidations Protocol was introduced. It is a formal pre-action procedure designed to encourage landlords and tenants to exchange information early, negotiate fairly, and avoid unnecessary litigation.
Alongside this protocol, the Royal Institution of Chartered Surveyors (RICS) has published detailed professional guidance known as Dilapidations in England and Wales.
The combination of the Dilapidations Protocol and RICS standards ensures that the process is both legally compliant and professionally managed.
Purpose of the Dilapidations Protocol
The Dilapidations Protocol was created to standardise the approach to dilapidations claims before court action. Its primary purposes are:
- To ensure that parties exchange information promptly and transparently.
- To promote early settlement and reduce legal costs.
- To set clear timeframes for key stages in the process.
- To encourage the use of alternative dispute resolution (ADR) methods before proceeding to litigation.
The protocol applies only to commercial properties in England and Wales and is part of the Civil Procedure Rules. Courts expect parties to follow it, and non-compliance can result in cost penalties, even if a party ultimately wins their case.
Key Stages in the Dilapidations Protocol
The Dilapidations Protocol sets out clear steps that landlords and tenants must follow.
Service of the Schedule of Dilapidations
Within 56 days of the end of the lease, the landlord should serve a Schedule of Dilapidations on the tenant. This document lists the alleged breaches of the lease, the repair or reinstatement works required, and estimated costs.
Quantified Demand
Alongside or shortly after the Schedule, the landlord must provide a Quantified Demand. This sets out the monetary value of the claim, which may be based on the cost of repairs or the diminution in the property’s value caused by the tenant’s breaches.
Tenant’s Response
The tenant has 56 days to respond to the Schedule and Quantified Demand. The reply usually takes the form of a Scott Schedule, addressing each claim item by item, agreeing, disputing, or proposing alternatives.
Negotiations
Both parties should seek to narrow the issues through negotiation. The Dilapidations Protocol encourages open dialogue, often involving professional advisers such as chartered building surveyors or specialist dilapidations consultants.
Alternative Dispute Resolution
Before court proceedings are considered, parties should explore ADR, such as mediation, arbitration, or expert determination. The courts will consider whether ADR was attempted when awarding costs.
RICS Guidance on Dilapidations
The RICS document Dilapidations in England and Wales provides a professional framework that works alongside the Dilapidations Protocol. It is aimed primarily at chartered surveyors and covers:
- How to prepare a Schedule of Dilapidations.
- The correct approach to costing repairs.
- It is essential to confirm the landlord’s intentions for the property after the lease ends.
- VAT considerations in dilapidations claims.
- The role of diminution valuations.
RICS guidance stresses that claims should reflect actual loss rather than simply the theoretical cost of repairs. If the landlord intends to redevelop or significantly alter the property, the value of the claim may be reduced.
The Schedule of Dilapidations
The Schedule of Dilapidations is the cornerstone of the process. It should be:
- Accurate and set out.
- Prepared by a suitably qualified professional, often an RICS chartered building surveyor.
- Supported by photographs and detailed descriptions.
- Costed reasonably and transparently.
The Schedule will typically cover repairing obligations, reinstatement of alterations, compliance with statutory requirements, and decorative works.
The Quantified Demand
The Quantified Demand provides the financial claim. It should reflect either:
- The reasonable cost of carrying out the necessary works, or
- The diminution in value of the property caused by the breaches, whichever is lower.
This prevents landlords from claiming inflated amounts and ensures the claim is proportionate to the actual loss suffered.
Tenant’s Response and the Scott Schedule
The tenant’s response is crucial. It allows the tenant to:
- Admit inevitable breaches and costs.
- Dispute items with reasons.
- Offer alternative solutions, such as a cash settlement.
The Scott Schedule is a side-by-side comparison of the landlord’s claims and the tenant’s replies, helping to narrow the issues for negotiation.
Landlord’s Intentions and Their Impact
One of the most important factors under both the Dilapidations Protocol and RICS guidance is the landlord’s intentions for the property. If the landlord plans to redevelop, demolish, or significantly alter the premises, some of the claimed repair works may be irrelevant, reducing the overall claim.
Surveyors must confirm and record these intentions early, as they can directly affect the validity and value of the claim.
Diminution Valuations
A diminution valuation assesses how much the tenant’s breaches have reduced the value of the property. This is particularly important if the landlord will not carry out the repair works.
Under Section 18(1) of the Landlord and Tenant Act 1927, damages for disrepair are capped at the diminution in the property’s value. This ensures that a landlord cannot recover more than the actual financial loss.
VAT and Dilapidations Claims
RICS guidance makes it clear that irrecoverable VAT may be included in a dilapidations claim. However, if the landlord can recover VAT through its tax arrangements, it should not form part of the damages sought. This ensures claims are fair and not artificially inflated.
Alternative Dispute Resolution
The Dilapidations Protocol promotes ADR as a way to resolve disputes without litigation. Common methods include:
- Mediation – An independent mediator facilitates a settlement.
- Arbitration – An arbitrator makes a binding decision.
- Expert determination – An appointed expert provides a decision based on technical evidence.
Courts expect parties to have considered ADR, and failure to do so can result in cost penalties.
Non-Compliance and Court Sanctions
If either party fails to comply with the Dilapidations Protocol, the court can impose sanctions. These may include:
- Ordering the non-compliant party to pay the other’s costs.
- Refusing to award interest on damages.
- Reducing the damages awarded.
Compliance is therefore not optional—it is a necessary step in protecting a party’s position.
Practical Tips for Landlords
- Instruct a RICS-qualified surveyor as soon as possible.
- Serve the Schedule of Dilapidations promptly, within the 56-day timeframe.
- Be realistic and proportionate in the Quantified Demand.
- Keep clear records of the landlord’s intentions for the property.
- Consider ADR before starting court proceedings.
Practical Tips for Tenants
- Respond to the Schedule within the 56-day deadline.
- Instruct your surveyor to review and challenge claims.
- Keep records of works carried out during the lease.
- Be prepared to negotiate and consider ADR.
- Understand your repairing obligations before signing a lease.
The Role of Surveyors
Surveyors play a central role in applying the Dilapidations Protocol and RICS guidance.
They must act professionally, provide accurate advice, and help their clients achieve fair outcomes. They should also ensure that claims are well-documented and supported by evidence, as this will carry significant weight in negotiations or at trial.
Conclusion
The Dilapidations Protocol in England and Wales provides a structured, fair, and transparent process for resolving commercial lease-end disrepair disputes.
When combined with the detailed professional standards set out by RICS, it ensures that claims are proportionate, evidence-based, and resolved as efficiently as possible.
For landlords, the protocol offers a clear route to recovering genuine losses. For tenants, it protects against exaggerated claims. Ultimately, following the Dilapidations Protocol benefits all parties by promoting early resolution and avoiding unnecessary legal costs.
Our top read blogs:
Free Legal Advice for Commercial Property Landlords in the UK
Why Landlords Are Increasingly Favouring Semi-Commercial Property Investments
The British Landlords Association is a national landlord association, one of the largest in the UK. The BLA is the only landlords’ association in the UK that represents and supports both commercial and residential landlords. Join us now for £89.95!
