Why is the landlord’s intention relevant to dilapidations at the end of the lease term? This paper was written for the RICS Dilapidations Forum Conference 30 September 2014 by Guy Fetherstonhaugh QC.
It is notoriously the case that a claim for damages for terminal dilapidations is limited by section 18(1) of the Landlord and Tenant Act 1927.
The first limb of that section stipulates that such damages cannot exceed the amount by which the value of the landlord’s reversion is diminished as result of the breach of repairing covenant. The second limb precludes any recovery at all where it is shown that the premises would at or shortly after the termination of the tenancy have been pulled down, or such works carried out as would render valueless the repairs covered by the covenant.
The actual landlord’s intention is usually (but not invariably) of critical importance in ascertaining whether the second limb condition is met.
The actual landlord’s intention is, however, of less obvious application in relation to the first limb, which appears to pose an objective market test, rather than focussing upon the behaviour of the landlord. But is that right?
This paper considers the circumstances in which the actual landlord’s plans for the premises may be relevant even in first limb cases.
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