Guide
Section 18 and what it does to a dilapidations quote
Updated
This is the provision that decides how much a works quote is actually worth in a negotiation, and it is the reason two parties can agree the cost of the works and still be a long way apart.
What section 18(1) says
Section 18(1) of the Landlord and Tenant Act 1927 caps damages for breach of a covenant to keep or put premises in repair at the amount by which the value of the reversion is diminished owing to the breach.
So the claim is a valuation question, and the cost of the works is evidence going to it rather than the answer to it.
Why that changes the conversation
A landlord presenting a priced schedule as the claim has presented the upper bound of one input. A tenant who only argues about rates is arguing on the landlord's chosen ground.
The question that actually decides the number is what the disrepair does to the value of the landlord's interest, which is a different exercise requiring a valuer rather than a building surveyor.
Where the cap bites hardest
Where the landlord's intentions for the building make the disrepair irrelevant to value. A building about to be stripped out for a new tenant, refurbished to a different specification, or redeveloped is the classic case.
That is a factual question about what the landlord actually does or intends, and it is why a tenant's first request is often for evidence of the landlord's intentions rather than for a re-pricing of the schedule.
What a tenant should commission, and when
A response to the schedule from a building surveyor deals with the items. A diminution valuation deals with the cap. They are different instructions and the second is the one that changes the ceiling.
Commission the valuation once the schedule is served and the landlord's intentions are known or can be inferred. Doing it earlier risks valuing a hypothetical; doing it later means negotiating for months on the wrong basis.