Landlords and Tenants: who pays for repairs?

A client keeps talking about his dilapidated mansions …. he may have some really bad Manors…. but , who pays for the repairs ?

It may not be who you think:- Repair liability and S18 LTA1927

Section 18(1) of the Landlord and Tenant Act 1927 limits the damages a landlord can recover for a tenant’s breach of repair covenants. Specifically, damages cannot exceed the reduction in the value of the landlord’s interest in the property due to the tenant’s failure to repair. This section applies predominantly to terminal dilapidations claims and is often neglected by Landlords who assume the full cost of repairs can be recovered.

The section contains two limbs: the first is “objective,” focusing on the market-based diminution of value, while the second is “subjective,” taking into account the landlord’s actual intentions for the property. The courts traditionally assess damages through a two-step process, first determining repair costs, and then considering whether the diminution in value is less than these costs. However, recent legal developments and cases like ‘Latimer v Carney’ have highlighted that focusing solely on repair costs without considering the diminution in value may be misleading. Courts are now more willing to discount repair costs if no actual repairs are intended or performed, suggesting that s.18(1) should be applied more flexibly.

S.18(1) is important and both its application and the law regarding repair in general is complex.  Both Landlords and Tenants should adopt a realistic/cautious approach to dilapidations claims, Landlords focusing on proving the real loss, not just repair costs, whilst Tenants, cannot assume simply that claims will fail without s.18(1) evidence, as courts may still infer a loss.

Recent cases highlight the importance of the section to anyone involved in commercial property leases and of the importance of:-

1. taking early legal advice,
2. approaching the potential dispute strategically,
3. preparing thorough valuation evidence at the outset,
4. serving and responding specifically setting out details of claim / dispute and,
5. negotiating openly to avoid expensive and uncertain proceedings.

If you wish to discuss further please call Kuits …our Manors and manners are perfect ….almost …..If you wish to discuss further please contact our Landlord and Tenant team on 0161 832 3434.