Interim dilapidations: what tenants need to know

Interim dilapidations: what tenants with years left on the lease need to know 

Most tenants associate dilapidations with the closing months of a lease. That assumption misses an important risk. Where a lease allows for it, a landlord can bring an interim dilapidations claim at any point during the term, sometimes years before expiry is anywhere near the tenant's mind. 

Understanding how an interim schedule of dilapidations works, and why it can carry more force than tenants expect, matters for any business holding a long commercial lease. This article sets out the legal basis for interim claims, the clause that makes them possible, and what tenants should do if one arrives unexpectedly. 

What is an interim schedule of dilapidations? 

A schedule of dilapidations is the document a landlord uses to set out alleged breaches of a tenant's repairing, decorating, and reinstatement obligations under the lease. Most tenants expect to see one only as the lease is coming to an end. An interim schedule of dilapidations is the same type of document, except it is served while the lease is still running, sometimes with years left on the term. 

The purpose is different too. A terminal schedule sets out what dilapidations are in the context of the property being handed back at expiry. An interim schedule is about making the tenant to carry out repairs now, while they remain in occupation, rather than leaving the work until the end of the term.

How does an interim dilapidations claim differ from a terminal one? 

The distinction between terminal vs interim dilapidations matters because the legal basis for each is different. A terminal claim is a claim for damages, and it is capped by section 18 of the Landlord and Tenant Act 1954, which limits the landlord's recovery to which limits the landlord's recovery to the drop in the property's value caused by the disrepair. 

An interim dilapidations claim usually works differently. If the lease gives the landlord the right to enter the property, carry out the repairs, and recover the cost from the tenant, that cost is recovered as a debt rather than as damages. Because it is a debt claim, the section 18 cap generally does not apply. That is one reason landlords may choose to act during the term rather than wait until lease expiry.

What is a Jervis v Harris clause and why does it matter? 

The ability to bring an interim dilapidations claim usually depends on the lease containing what is known as a Jervis v Harris clause, named after the 1996 Court of Appeal case that confirmed how this type of provision operates. 

A Jervis v Harris clause typically gives the landlord the right to inspect the property, serve notice requiring repairs within a set period, and, if the tenant fails to comply, carry out the work directly and recover the cost from the tenant as a debt. 

Because the sum is recovered as a debt rather than through a damages claim, the tenant cannot rely on the section 18 cap to limit their exposure. For tenants, this makes the presence, or absence, of a Jervis v Harris clause one of the most important things to check when reviewing lease terms. Without one, a landlord's options for acting mid-term are far more limited. 

When might a landlord serve an interim schedule of dilapidations? 

A landlord does not usually serve an interim dilapidations claim without good reason. In practice, it tends to happen in a handful of recurring situations. 

• Deferred repairs are starting to affect the value or insurability of the property. 
• The investment is being prepared for sale or refinancing, and a clean repair record supports a stronger valuation. 
• The tenant's financial position has weakened, and the landlord wants to secure recovery while a debt claim remains realistic. 
• The lease still has many years to run, and waiting until expiry would leave serious disrepair unresolved for far too long. 

In each of these situations, the landlord's surveyor will usually have carried out a condition survey or similar inspection before the schedule is prepared, so the claim tends to arrive already well evidenced. 

How should tenants with years left on the lease respond? 

Receiving a dilapidations claim mid-lease can feel disorientating, particularly if expiry is still some years away. The first step is to check whether the lease actually contains a Jervis v Harris clause or an equivalent interim repair provision. Not every lease does, and the landlord's ability to start works during the term depends entirely on it. 

Where the right does exist, a surveyor experienced in dilapidations should review the schedule item by item. Interim claims are not immune to overstatement, and the same checks that apply to a terminal schedule, whether the items fall within the lease, whether costs are realistic, whether works are genuinely necessary now, apply here too. 

It is also worth discussing timing and method with the landlord directly. Many tenants can agree a programme of works carried out over a reasonable period, rather than facing a single lump sum demand or the landlord carrying out the work and billing the cost afterwards. 

What can tenants do to protect their position for the rest of the term? 

The strongest protection against an unwelcome interim dilapidations claim is understanding the lease before a problem arises, not after. 

• Review the repair clause and any interim rights at the outset, ideally before signing, so there are no surprises later. 
• Commission a schedule of condition at the start of the lease to fix a clear baseline for what the tenant is actually responsible for repairing. 
• Keep on top of routine maintenance throughout the term, rather than deferring it, so there is little for an interim claim to target. 
• Take professional advice as soon as a schedule is served, rather than waiting to see whether the landlord follows through. 

Tenants who stay ahead of routine repairs during the term also tend to face a smaller bill at expiry, since many of the items that would otherwise appear on a terminal schedule have already been addressed. Guidance on avoiding a large dilapidations bill applies just as much mid-term as it does at the end of the lease. 

Speak to our building consultancy team about interim dilapidations claims 

Our building consultancy specialists advise landlords and tenants on both interim and terminal dilapidations claims, from checking whether a Jervis v Harris clause applies to negotiating the scope and cost of any works required. 

If you have received an interim schedule of dilapidations, or want to understand your exposure before one arrives, call 0330 191 8107, email [email protected], or complete the contact form below to arrange a consultation.