Terminal vs Interim Dilapidations and Strategic Timing for Landlords

The timing of a dilapidations schedule shapes everything that follows. Act too late and the tenant's obligation to repair becomes a financial claim; reinstatement works that could have been required becomes a negotiation. The choice between an interim and a terminal schedule of dilapidations is often a choice about when you act, and what you can recover.

The differences between the two schedules are partly legal and partly commercial. Timing, scope and remedy all change depending on which route a landlord takes, with the wrong choice limiting what’s recoverable at lease end.

What Dilapidations Cover

Dilapidations refer to breaches of the lease covenants that govern the physical condition of a commercial property. The covenants usually fall into three categories: repair, reinstatement of alterations and redecoration. A landlord's right to enforce these obligations runs throughout the lease, not only at expiry. Which is why the choice between an interim and a terminal schedule carries real financial implication

Interim Schedules of Dilapidations Explained

An interim schedule of dilapidations is served during the lease term. The primary purpose is corrective rather than financial, meaning that the landlord wants the building maintained  rather than money in lieu of works, although it can also strengthen the landlord’s position for later recovery.

When an Interim Schedule Is Served

An interim schedule can be served at almost any point during the lease, although it is less commonly used in the final two to three years of a lease. By that stage a terminal schedule will usually capture the position more efficiently. Landlords typically use interim schedules where there is enough lease left to run that the deterioration would worsen materially before expiry and serving notice now will either secure repairs or build a record for later enforcement. In practice, interim schedules are most effective as a mid-term tool rather than an end-of-term strategy.

What an Interim Schedule Typically Includes

Interim schedules tend to focus on issues that will accelerate decay if left alone: roof repairs, water ingress, structural items, failing services. Cosmetic items such as internal redecoration are often left out on the basis that they will be addressed nearer the end of the lease. Reinstatement of tenant alterations is also generally deferred.

The Jervis v Harris Remedy and Other Enforcement Routes

If a tenant ignores an interim schedule, the landlord's options depend on the lease. Most modern commercial leases contain what is known as a Jervis v Harris clause, named after the 1996 Court of Appeal decision. The clause allows the landlord to enter the premises, carry out the works themselves, and recover the cost from the tenant as a debt rather than as damages. That distinction is significant for tenants and landlords. A debt claim means the statutory cap in Section 18(1) of the Landlord and Tenant Act 1927 does not apply.

This is not without risk, though. Landlords wishing to proceed down this route would be well advised to seek advice from a dilapidations surveyor and take legal advice, as these matters can be complex and the lease terms must be followed precisely.

Other remedies are available but used less often. Forfeiture under Section 146 of the Law of Property Act 1925, specific performance, damages and injunctions are all possible, but each carries cost, time and reputational considerations that most landlords would rather avoid where the building can simply be put right.

Terminal Schedules of Dilapidations Explained

A terminal schedule of dilapidations is served at or near the end of the lease. The purpose is to set out the tenant's accrued liability so the landlord can either get the works done by the tenant or recover damages.

When a Terminal Schedule Is Served

There is no fixed window, but most surveyors prepare a terminal dilapidations schedule somewhere between 18 months and three months before lease expiry. Earlier service gives tenants enough time to carry out the works themselves; later service tends to push the matter towards a financial settlement, because the tenant no longer has practical access to do the work. Delaying service until the final weeks of the term can be costly. Late service can lose the chance to require reinstatement of alterations depending on the specific wording of the lease.

What a Terminal Schedule Typically Includes

A terminal schedule covers all three categories: repair, reinstatement and redecoration. It quantifies the work required and, in most cases, the cost. Before expiry, the tenant may complete the works. After expiry, the claim is typically resolved financially.

The Dilapidations Protocol and the Quantified Demand

Once the lease has ended, terminal dilapidations claims fall under the Pre-Action Protocol for Claims for Damages in Relation to the Physical State of Commercial Property at Termination of a Tenancy (the Dilapidations Protocol) adopted under the Civil Procedure Rules in 2012. The Protocol sets the framework for the process. The landlord serves the schedule, supports it with a quantified demand, and the parties exchange positions and meet before any court action. Surveyors on both sides endorse their schedules in line with the RICS Dilapidations Professional standard (7th edition). Non-compliance with the Protocol is something the court considers on costs.

A Brief Note on Final Schedules

A third type, the final schedule, is sometimes confused with the terminal schedule. A final schedule is served after lease expiry, often where a terminal dilapidations schedule was not served in time or where additional damage has been identified post-handover. By this stage the tenant has no right to re-enter and put the works right. The only realistic remedy is a financial claim. The Protocol expects the claim to be progressed within a reasonable time after the lease has ended.

Terminal vs Interim Dilapidations

The two schedules differ across timing, scope and remedy, better understood with the below table.

Strategic Timing for Landlords

The real question is when to act, and whether to act at all.

When to Choose an Interim Schedule

Interim action is the right call where the asset is deteriorating in a way that will be expensive to reverse, where the lease has more than two or three years to run, and where a Jervis v Harris clause is available. The financial logic is straightforward because a debt recovery under the lease avoids the Section 18 (1) diminution cap that limits terminal damages. An interim schedule served at year five of a ten-year lease can preserve both the building and the eventual claim.

There is also a soft benefit. Tenants who are reminded of their repair covenants mid-term tend to take them more seriously towards the end of the term. A well-handled interim process often reduces the size of the terminal dilapidations claim that would otherwise follow.

When a Terminal Schedule Is the Stronger Move

Terminal schedules are the right tool where the lease is genuinely close to expiry, where reinstatement is in play, and where the landlord's intentions for the property are settled enough to support the claim. The Protocol requires the schedule to take account of those intentions. A landlord planning a major refurbishment cannot generally claim for works the refurbishment will supersede. Getting the schedule prepared 12 to 18 months out gives the tenant a genuine window to complete the works and gives the landlord time to negotiate.

Where the Two Routes Can Work Together

The most effective dilapidations strategies often use both. An interim schedule mid-term protects against accelerated deterioration. A terminal schedule, prepared early enough to be credible, captures the residual position at exit. The two schedules deal with different risks and recover under different mechanisms, and they reinforce one another when timed properly.

Where Tenants Tend to Push Back

Three lines of tenant argument come up consistently, and a strong schedule anticipates all of them.

The first is Section 18 (1) of the Landlord and Tenant Act 1927. This caps damages at lease end to the diminution in the value of the landlord's reversion caused by the breaches. Where a landlord intends to demolish or substantially refurbish, the diminution can be nil or close to it. A surveyor preparing a terminal schedule needs to know the landlord's intentions and assess whether a Section 18 (1) defence is likely.

The second is supersession. If the landlord's intended works will replace items listed on the schedule, those items may be superseded. The tenant should not pay to repair what the landlord plans to remove anyway. Tenants increasingly raise supersession early, supported by their own surveyor's evidence.

The third is the reasonableness of the works specified. Both the schedule and the quantified demand must be endorsed under the Protocol as reasonable to remedy the breaches. Schedules that overstate the scope tend to unwind quickly when scrutinised.

How Watts Advises Landlords

Our Building Surveying team handles dilapidations claims of every scale, from single units to multi-million-pound portfolio matters. We act for landlords and tenants, which gives us a clear sense of where the other side is likely to push back.

We have seen an increase in landlords pursuing interim schedules as a method of reducing risk exposure by encouraging tenants to maintain their properties throughout the term rather than allowing disrepair to accumulate until lease end. There is also a financial protection argument: a tenant who becomes insolvent after expiry but before a terminal claim is settled can leave the landlord with a liability and no one to pursue it. Acting mid-term, when the tenant is solvent and still in occupation, reduces that risk.

The team works in line with the RICS Dilapidations Professional standard (7th edition) and CPR Part 35, with recent experience in mediation and court representation where settlement is not possible. In 2025, Watts provided landlord and tenant advisory services across around 2.5 million square feet of commercial property acting for landlords and tenants on industrial, office, retail and other properties.

For a wider view of our advisory work, see our article on the dilapidations dilemma at lease expiry and our analysis of accounting for dilapidations under FRS 102.

Whether you are weighing an interim schedule mid-term or preparing for lease end, early advice tends to recover more value than late intervention. Contact our Dilapidations team to discuss your portfolio.

Frequently Asked Questions

Can a landlord serve both interim and terminal schedules during the same lease?
Yes. The two schedules deal with different periods and different categories of breach. An interim schedule served mid-term to address accelerated deterioration does not prevent a terminal schedule at lease end covering reinstatement, redecoration and any ongoing breaches of the repair covenant.

Does the Dilapidations Protocol apply to interim schedules?
The Pre-Action Protocol applies specifically to terminal claims, with disputes about the physical state of commercial property at termination of a tenancy. Interim claims fall outside its scope, although best practice and the general Practice Direction on Pre-Action Conduct still expect parties to behave reasonably, exchange information and try to resolve matters before litigation. Surveyors typically apply the same standards of evidence and endorsement either way.

How does Section 18 (1) interact with a Jervis v Harris claim?
Section 18 (1) of the Landlord and Tenant Act 1927 caps damages for breach of repair covenants at the diminution in the value of the landlord's reversion. The cap applies to claims for damages, but not to a debt claim for the cost of works carried out by the landlord under a Jervis v Harris clause.

What happens if the landlord's intentions for the property change after a terminal schedule is served?
The schedule must reflect the landlord's intentions at the time it is endorsed, but those intentions can shift between service and settlement. If a landlord later decides to refurbish or redevelop in a way that supersedes items on the schedule, the tenant can rely on supersession to reduce the claim. A surveyor should revisit the schedule once the landlord's plans are firm.

Nick Loydall BSc (Hons) MRICS
Associate Director
+44 (0)7561 705029
nick.loydall@watts.co.uk