Section 18 of the Landlord and Tenant Act 1927: The Dilapidations Cap, Explained
- Section 18(1) of the Landlord and Tenant Act 1927 caps dilapidations damages at the amount by which the disrepair reduces the value of the landlord's interest.
- That cap can be far lower than the cost of the repairs being claimed, especially where the landlord intends to refurbish or redevelop.
- It applies to the 'yield up in repair' part of a claim, and works alongside the rest of the dilapidations process.
- Establishing the cap needs a diminution valuation from a surveyor, so both the cost of works and the loss in value are on the table.
When a commercial lease ends, a landlord's dilapidations claim usually starts from the cost of the repair works. But the cost of the works is not automatically what a tenant owes. Section 18 of the Landlord and Tenant Act 1927 sets a statutory ceiling on those damages, and on the right facts it can reduce a claim dramatically, sometimes to little or nothing.
What Section 18 actually says
Section 18(1) of the Landlord and Tenant Act 1927 provides that damages for a breach of a covenant to keep or leave premises in repair "shall in no case exceed the amount (if any) by which the value of the reversion... is diminished owing to the breach."
In plain terms: however much the repairs cost, the landlord can't recover more than the amount the disrepair has actually knocked off the value of their interest in the property. If the disrepair has caused little or no loss in value, the claim is capped accordingly.
This is general information, not legal or valuation advice. Section 18 arguments turn on the specific facts and the wording of your lease.
Why it matters for tenants
Dilapidations schedules are usually built up from the cost of every item of repair, redecoration and reinstatement. That produces a headline number that can look alarming. Section 18 reframes the question from "what do the works cost?" to "what has the disrepair actually done to the value of the landlord's asset?"
Those two figures can be very different. If the landlord is going to strip out and refurbish the space anyway, much of the claimed work may make no difference to value, and the cap bites hard.
Supersession: when repairs fall away
A closely related idea is supersession. If the landlord's own intended works would replace or override the items in the schedule, the tenant shouldn't have to pay for repairs that the landlord was going to undo anyway.
For example, if a landlord plans to replace all the ceilings as part of a refurbishment, charging the tenant to make good those same ceilings would be double counting. Supersession and the Section 18 cap often run together, both pushing the recoverable figure below the raw cost of works.
How the cap is calculated
Establishing the cap needs a diminution valuation: a surveyor assesses the value of the landlord's interest in the property in its actual (out of repair) state, and its value if the tenant had complied and left it in repair. The difference between the two is the ceiling on damages.
Because both the cost of works and the diminution figure are relevant, a well-advised tenant makes sure both are properly evidenced, rather than negotiating only on the cost of the works.
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What Section 18 doesn't cover
Section 18 caps damages for breaches of repairing covenants. It doesn't automatically dispose of every obligation in a lease. Reinstatement of tenant alterations, statutory compliance, and other covenants can be treated differently, and the detail depends on your lease and the facts. This is exactly where experienced advice earns its keep.
A worked example
Numbers make it concrete. Suppose a landlord's schedule totals £60,000 in repair, redecoration and reinstatement works. The tenant's surveyor obtains a diminution valuation and finds the property is worth about £15,000 less out of repair than it would be in repair. Section 18 caps the recoverable damages at that £15,000, whatever the works are said to cost.
If the landlord then strips the space back for a major refurbishment, a supersession argument may pull the figure down further still, because works that would be undone anyway shouldn't be charged to the tenant. The headline £60,000 and the recoverable figure are simply answers to two different questions.
These figures are illustrative only. Every case turns on its own valuation evidence and the wording of the lease.
Getting the valuation done
To run a Section 18 argument properly you need a RICS-qualified surveyor who is experienced in dilapidations and can prepare a diminution valuation, ideally engaged early, before positions harden. You can check a surveyor's regulation via RICS Find a Surveyor, or let ComSurv match you with surveyors who do this work.
Sources & further reading
- Section 18, Landlord and Tenant Act 1927 — the diminution in value cap, in full, on legislation.gov.uk
- RICS: Dilapidations in England and Wales (consumer guide) — RICS overview of dilapidations and valuation
- Dilapidations Pre-Action Protocol (Ministry of Justice) — how a claim proceeds around the cap
- RICS Find a Surveyor — RICS-regulated surveyors who prepare diminution valuations
External links open in a new tab. ComSurv is a matching service, not a firm of surveyors, and is not affiliated with these organisations. This article is general information, not legal, surveying or valuation advice; take advice on your specific situation.
