Where dilapidations disputes typically arise
Disputes generally crystallise around four issues: (1) was the defect pre-existing at lease grant, (2) what is a reasonable scope and cost of remedial works, (3) what is the Section 18 diminution in the value of the reversion, and (4) is the landlord's intended use consistent with the works claimed. Each has its own evidence base and its own resolution route.
Section 18, the statutory cap on damages
Section 18(1) of the Landlord and Tenant Act 1927 caps damages for breach of the repairing covenant at the diminution in the value of the reversion caused by the breach. Where the cap is in play, a chartered valuation surveyor prepares a diminution valuation. This often produces a settlement figure substantially lower than the cost of works in the schedule.
The Scott schedule
The Scott schedule is the working document of the negotiation: landlord's claim, tenant's response, surveyors' agreed positions, residual disputes, item by item. Scott schedule discipline is where most claims actually settle. Engaged surveyors on both sides typically agree two-thirds to three-quarters of items in the first pass, leaving a narrow set of residual disputes.
Alternative dispute resolution
The Pre-Action Protocol expects parties to consider ADR before issuing proceedings. Mediation is the most common route, typically a single day, with both parties' surveyors and solicitors in attendance. Settlement rates at mediation are high.
How a Schedule of Condition shortens the dispute
Where a properly prepared Schedule of Condition is in place, items that were documented at lease grant are removed from the claim before negotiation begins. The dispute, if any, narrows to genuine post-lease deterioration: materially smaller in scope and faster to settle.