As most experienced landlords will know, dilapidations claims can be a tricky business.  In particular, landlords can find themselves in a grey area when it comes to evidencing their loss of rent claim, where the law is somewhat unclear.   

It is generally accepted that a landlord needs to show that, were it not for the premises being left in disrepair, they would have been re-let earlier than they were. 

However, it is not clear what the burden of proof is, or how the Court will approach the landlord’s claim, and the following are some commonly encountered issues when it comes to pursuing such a claim:

• Not knowing, prior to the lease expiry date, whether the tenant is going to leave the premises in repair. 
• The chicken-and-egg issue of being required to prove that the premises would have been re-let had they been left in repair (i.e. how can a landlord be expected to market the premises to prospective tenants on the assumption that the premises are in repair, in circumstances when the premises are in fact in disrepair?).
• Having no evidence as to the state of the local property market as of the lease expiry date, or the likelihood that the premises would have been re-let shortly after lease expiry.
• Landlords sitting on the premises for weeks / months / years after lease expiry, without carrying out repair works (and therefore failing to mitigate their losses). 
• Not knowing what the burden of proof is (i.e. does the landlord merely need to convince the Court that the local market was so strong that a tenant probably would have been found, or does the landlord need to provide actual evidence that there was concrete interest or bids from prospective tenants?).

Unfortunately, landlords are not offered much guidance from the Court in matters such as these. In one recent decision*, the Court spent only one paragraph analysing the landlord’s loss of rent claim, before concluding with the high-level assessment that the landlord was entitled to a very round figure of £100k (compared to the c.£128k claimed by the landlord), on the basis that “…It would be unrealistic to adopt a mathematical approach to this exercise. Instead, I am satisfied that recovery of approximately two thirds of these losses is justified…”). 

Until such time as the Court provides greater clarity, some tips for landlords to increase the likelihood of their loss of rent arguments succeeding:

• Serve the schedule of dilapidations, and attempt to understand the tenant’s intentions for the premises, as early as possible.
• Consider the tenant’s reinstatement obligations, and serve any reinstatement notices, as early as possible. Otherwise, the landlord may lose the ability to compel the tenant to reinstate the premises (or conversely, to compel the tenant to leave its fit-out in situ).
• Take advice (in writing, and prior to the lease expiry date, ideally) from a lettings agent, with regard to: i) the strength of the local market; ii) the likelihood of the premises being re-let on the day after lease expiry, were the premises left in repair; iii) what the likely open market rent for the premises would be (including any incentives such as rent-free periods).
• Repair, market, and re-let the premises at the earliest possible juncture, and keep a paper trail of the landlord’s efforts in doing so (in order to mitigate the landlord’s losses, and fend off arguments that the landlord did not re-let the premises as early as reasonably possible).  

* Peachside Ltd v Lee [2024] EWHC 921 (TCC)