Section 18(1) and diminution in value

A tenant held a 25-year FRI lease on premises in central London and vacated on its expiry date. The compliant state envisaged under the terms of the lease was a 1990s specified building in repair and good decorative order. The landlord prepares and serves a terminal schedule of dilapidations to include a quantified demand detailing a total claim in dilapidations of £627,500. The claim comprises cost of works of £250,000 with preliminaries and fees of £77,500 and loss of rent of £300,000.

In undertaking the valuations, the investigations identified 2 types of potential hypothetical purchasers, where the worth of the property differs to each purchaser (see Worked example 1: diminution of value, no supersession and Worked example 2: diminution of value, with supersession).