Section 18 is the single most important piece of law in a dilapidations dispute. Here's what it actually says and why it matters.
Section 18 of the Landlord and Tenant Act 1927 limits the damages a landlord can recover for a tenant's breach of a repairing covenant. However large the schedule of dilapidations looks, the landlord's damages cannot exceed the amount by which the value of their interest in the property has actually been diminished by the disrepair.
This is the part most people mean when they refer to "the Section 18 cap." The cost of the repair works listed in a schedule is not automatically what the landlord can claim. If carrying out the repairs would add less value to the property than the works cost, the landlord's recoverable damages are capped at that lower figure.
Where the landlord intends to demolish or substantially alter the premises at or shortly after lease end, in a way that would make the repairs irrelevant, no damages at all may be recoverable for those items. This is known as supersession, and it can be a powerful argument for tenants where a landlord's redevelopment plans are already known.
Section 18 doesn't stop a landlord serving a schedule with high figures. What it does is give a tenant's surveyor a legal basis to argue that the true recoverable loss is significantly lower than the headline number, by commissioning or challenging a diminution valuation alongside the schedule of works.
This is a valuation exercise, usually carried out by a surveyor, comparing the value of the property in its current condition against its value if the repairs had been carried out. The difference between those two figures, not the cost of the works themselves, is the statutory ceiling on what can be claimed.
If you're facing a large schedule, the headline figure is rarely the number that matters most. What matters is whether a proper diminution valuation would support a claim anywhere near that size, and that's a question worth getting answered early.
Whether you're a tenant who's received a claim or a landlord preparing one, the right specialist advice early changes the outcome.
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