What is a Section 18 valuation?
Section 18 of the Landlord and Tenant Act 1927 relates to how much a landlord can recover from a tenant for disrepair at the end of a lease. It assesses the damages that result from a tenant’s failure to meet their repairing obligations under the lease.
Why it is used
When a tenant leaves a property in disrepair, the landlord may seek to recover the cost of putting the property back into repair. A Section 18 valuation helps ensure the claim is fair by providing a framework that can cap what the landlord can recover. It balances the tenant’s repairing obligations with the principle of compensation, ensuring the claim does not exceed the landlord’s actual loss.
The two key tests
A Section 18 valuation focuses on two main questions.
Has the disrepair reduced the property’s value?
This is the “diminution in value”. The landlord can only claim repair costs up to the extent that the disrepair has reduced the property’s Market Value.
Are there wider plans for the property?
If the landlord intends to redevelop, demolish or significantly alter the property after lease expiry, repairs may be irrelevant. In some cases this can reduce, or remove entirely, the tenant’s liability.
How it works in practice
Valuers assess the property’s Market Value with the disrepair and consider the value assuming the disrepair is remedied. They also consider local market conditions and the landlord’s intentions for the property. This requires a clear understanding of valuation principles alongside the legal context.
How Vickery Holman can help
Vickery Holman offers a comprehensive dilapidations service for both landlords and tenants in accordance with the Dilapidations Pre-Action Protocol. Our Building Surveying team undertakes dilapidations liability assessments, inspections, claim preparation and response, and negotiations. Our Valuation team prepares Section 18 valuations, working closely with our in-house surveyors and also supporting external building surveying practices that do not have in-house valuation expertise. Vickery Holman Chartered Surveyors l Building Surveyors l Valuers
