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The purpose of this paper is to look at the practical considerations of valuations undertaken in the UK at the end of leases when the landlord and the tenant are negotiating on the dilapidations claim.

The paper is a review of current professional practice and highlights the salient issues to consider when looking at dilapidation claims.

The paper considers a fundamental principle of dilapidations. That is, how much has the market value of the landlord’s interest diminished at the end of the lease by reason of the disrepair.

The paper is based on the interpretation of current statute and case law. Diminution valuations are hotly contested and there is currently little professional guidance available to practitioners.

The paper guides landlords, tenants, building surveyors and their valuers on the thought process and practical approach to be adopted in assessing loss in dilapidations cases where the underlying assessment will be carried out on the basis of diminution in value.

There is very little written on the practical implications of diminution valuations when assessing dilapidation claims. This paper addresses that shortcoming.

This is the first of two papers on the Principles and Practice of Dilapidations by Ian Melville, Chairman of the Editorial Board of Structural Survey. It consists of an introduction and the information that the dilapidations surveyor must obtain before he even starts the work of preparing his schedule. The second paper will deal with express covenants to repair, statutory requirements and interim and terminal schedules of dilapidation.

Leaving aside implied obligations of landlords to repair, imposed by statute, the precise words employed in express covenants to repair are of considerable importance. This aspect of dilapidations is often not given enough weight and no apology is made for repeating certain basic comments on leading cases.

In part I (Volume 14 Number 3) the author wrote generally about the various legal and practical issues to take into account in preparing or in defending against a Schedule of Dilapidations served in respect of commercial property. Part II examines some of the practical issues considered in the recent case Shortlands Investments Ltd v. Cargill plc and explains how valuations are made under Section 18(1) of the Landlord and Tenant Act 1927 in order to determine the cap on damages to be paid in settlement of a dilapidation’s claim.

Suggests that good forward planning in respect of dilapidations liabilities can make a tremendous difference for both landlords and tenants. It is therefore important for the practising surveyor to have a good working knowledge of the law and practice. Sets out pointers to good practice on the practical side. Discusses some important principles of law and draws examples from recent cases.

Shows that when it comes to the legal area of repairs and dilapidations, the balance has been tipped further in favour of the tenant. Considers the Leasehold Property Act 1938 and disadvantages for the tenant and then describes how following the 1990 decision by the House of Lords the position has changed.