Dilapidations costs come in two layers that get confused constantly. There is the cost of the professional work, which is the surveyor preparing or responding to a schedule, and there is the claim itself, which is what the landlord says the breaches are worth. The second is negotiable, often heavily, and the first is usually small against it.
Get the schedule priced properly
A schedule of dilapidations lists the breaches and, in a quantified demand, what the landlord says each costs to remedy. A tenant's surveyor prices the same list independently. The gap between those two exercises is where the negotiation happens.
Apply the statutory cap early
Section 18 of the Landlord and Tenant Act 1927 caps damages at the amount by which the landlord's reversion has been diminished. Where a building is to be redeveloped or relet regardless, that cap can reduce a claim substantially, and it is the tenant's surveyor who has to raise it.
Follow the protocol
The pre action protocol sets out how a claim is made and responded to, with time limits. Following it keeps costs proportionate and failing to follow it is something a court will notice. The protocol also expects the surveyors on both sides to endorse their documents, which is what stops a schedule being a wish list.
Settle the VAT question in writing
Whether VAT is recoverable depends on the landlord's own VAT position and on whether the payment is damages or consideration. Get the treatment confirmed rather than assumed, because it moves a large number.
Weigh doing the works against paying
A tenant with time left on the lease can often carry out the works more cheaply than the landlord's costed schedule. That is a commercial decision to take early, not on the day the lease ends. Doing the works needs time, access and a contractor, so the decision has to be taken while the lease still has enough term left to act on it.
Questions people ask about dilapidations costs
Who pays for the dilapidations surveyor?
Each side pays its own. The landlord's costs of preparing a schedule may be recoverable under the lease, so read the lease before assuming.
Is VAT payable on dilapidations?
It depends on the facts and on the landlord's VAT position, and HMRC's approach to whether such payments are consideration has moved over time. Take specific advice rather than applying a rule of thumb.
What is supersession in dilapidations?
It is the argument that a landlord's intended works would have superseded the repair anyway, so the tenant should not pay for it. It sits alongside the section 18 cap and is one of the main reasons a claim falls.