Commercial Dilapidations Law

Section 18 Dilapidations Cap — Landlord and Tenant Act 1927

Section 18(1) LTA 1927: two caps on commercial dilapidations damages. Diminution cap: damages cannot exceed reduction in value of landlord's reversion caused by breach of repairing covenant (Jones v Sherwood Computer Services [1992]). Supersession cap: damages nil where landlord intends to demolish or structurally alter property so repairs would be valueless (Salisbury v Gilmore [1942]; Hibernian Property v Liverpool Corporation [1974]). Cost of works is starting point not ceiling. Jervis v Harris [1996]: landlord carries out repairs under self-help clause and recovers as debt — s.18(1) does not apply to debt claims. Terminal schedule of dilapidations; Scott Schedule; RICS Dilapidations Guidance Note (7th ed 2016). Scotland: no s.18 equivalent; common law obligation to repair and deliver up at ish.

10 min readUpdated 7 June 2026Last reviewed: 17 May 2026dilapidationssection-18lta-1927repairing-covenant

The Two Caps Under s.18(1) LTA 1927

s.18(1) LTA 1927: damages for breach of tenant's repairing covenant capped at: (1) Diminution cap — amount by which value of landlord's reversion is diminished by the breach; (2) Supersession cap — nil if landlord intends to demolish or structurally alter property at/after lease end so repairs would be valueless. Cost of works is the starting point, not the ceiling. Both caps require RICS expert valuation evidence. Burden: landlord proves diminution; tenant proves supersession.

Diminution Cap in Practice

Compare open market value of landlord's reversion in actual condition vs value had tenant complied with repairing covenant. Where property immediately re-let at market rent, sophisticated investor purchaser may pay same price — diminution nil even where schedule of dilapidations shows significant cost. Void period risk: disrepair causing extended void can evidence diminution. Jones v Sherwood Computer Services [1992]: expert valuation essential; s.18(1) is mandatory cap, not equitable discretion.

Supersession Cap

Tenant's defence: if landlord intends to demolish/structurally alter at/after lease end so repairs would be rendered valueless, damages are nil. Firm and settled intention required — conditional or speculative intention insufficient (Salisbury v Gilmore [1942]). Intention can arise after lease expiry but before trial. Partial supersession: only repairs relating to part to be demolished are superseded. Evidence: planning applications, board resolutions, letters of intent.

Jervis v Harris Route — Avoiding s.18(1)

Jervis v Harris [1996] Ch 195: where lease contains self-help clause (right to enter and carry out repairs and recover cost as debt), and landlord actually carries out works, recovery is as debt not damages — s.18(1) does not apply. Landlord must complete repairs before suing. Must comply strictly with notice provisions in the clause. Clause must be in the lease — does not arise automatically. Scott v Jacks [2019]: strict procedural compliance required.

Schedule of Dilapidations Process

Terminal schedule: prepared by landlord's surveyor at/after lease end; lists breaches; quantifies remedial cost as starting point. Counter-schedule: tenant's surveyor disputes items, standard (Proudfoot v Hart (1890) — age/type of property), and cost. RICS Dilapidations Guidance Note (7th ed 2016): Scott Schedule format; Calderbank offers; RICS arbitration. Scotland: no s.18 cap; common law obligation to maintain in tenantable repair throughout lease and deliver up at ish.

Frequently asked questions

What is the Section 18(1) cap on dilapidations?+

Section 18(1) LTA 1927 imposes two caps: (1) diminution cap — damages cannot exceed reduction in value of the landlord's reversion caused by disrepair; (2) supersession cap — damages are nil if the landlord intends to demolish or structurally alter the property such that repairs would be valueless. The cost of works is the starting point, not the ceiling.

Can a landlord avoid the Section 18(1) cap?+

Yes — if the lease contains a Jervis v Harris self-help clause and the landlord actually carries out the repairs, the cost is recoverable as a debt rather than damages. Section 18(1) does not apply to debt claims. The landlord must complete the works before suing and comply strictly with the notice requirements (Jervis v Harris [1996] Ch 195).

What evidence is needed for the diminution cap defence?+

Expert RICS valuation evidence comparing the open market value of the landlord's reversion in its actual condition with its value had the repairing covenant been complied with. If the property was immediately re-let at market rent, the evidence may show diminution is nil even if the schedule of dilapidations shows large repair costs (Jones v Sherwood Computer Services [1992]).

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