When a Schedule of Dilapidations lands at the end of your office lease, you face one decision that swings the final cost more than any other: do you pay the landlord a cash settlement, or do you instruct your own contractor to carry out the works before you hand back the keys?
For most London office tenants the answer is clear. Doing the works through a specialist contractor is typically 20–35% cheaper than settling — and on a 5,000 sq ft floor that gap is regularly £30,000–£60,000. This guide explains why, when settlement is genuinely the right call, and how to make sure you end up on the cheaper side of the line.
The two ways to discharge a dilapidations liability
Once the landlord serves a Schedule of Dilapidations, you have two routes to discharge it.
Route 1 — Do the works. You instruct a specialist dilapidations contractor to physically deliver the strip-out, Cat A reinstatement, M&E reinstatement and redecoration the schedule requires, complete it before lease end, and hand the building back in the condition your lease specifies. Once the works are signed off, the liability is gone — there is nothing left to argue about.
Route 2 — Pay a settlement. You agree a cash sum (a “dilapidations claim”) with the landlord in lieu of the works, and they carry them out themselves — usually at retail rates, with their own fees and margin on top.
Both routes end your liability. They rarely cost the same.
Why a settlement usually costs more
A settlement feels like the easy option. In practice it is the expensive one, for four reasons:
- The landlord prices at retail. A claim is built on a worst-case reading of the schedule and includes the landlord’s preliminaries, professional fees, contract administration and contractor profit — layers you pay for but never see.
- You lose control of the specification. Once a settlement is paid, the landlord can spend it however they like — often upgrading the space for the next tenant on your money.
- Betterment creeps in. Schedules routinely list “reinstatement” for items that were already there at lease commencement, or that improve the building beyond your actual obligation. A specialist prices only what you genuinely owe.
- A contractor prices at delivery rates. Instruct the works directly and you pay the cost of physically doing them — no surveyor middleman, no landlord margin.
This is why tenant-instructed works almost always come in below the landlord’s claim figure for the same scope.
A worked example — 5,000 sq ft Central London office
The figures below reflect 2026 London prices. Landlord claims for the same scope typically sit 20–35% higher.
| Route | Basis | Typical cost (5,000 sq ft) |
|---|---|---|
| Do the works (contractor) | Cost of delivering the strip-out + Cat A reinstatement + M&E + decoration | £75,000 – £125,000 |
| Pay a settlement (landlord) | The same scope, plus prelims, fees, contract admin and margin | £105,000 – £180,000+ |
| Typical saving by doing the works | £30,000 – £60,000 |
The exact numbers depend on the original specification, how heavily the space was fitted out, building access and the M&E scope — but the direction of travel is consistent: doing the works is the cheaper route.
When a settlement is genuinely the right call
We will always tell you straight: settlement is sometimes the sensible option. It usually makes sense when:
- There is no time left to do the works before your lease end or break date. Below about four weeks of programme, a negotiated settlement may be unavoidable.
- The landlord is demolishing or redeveloping and a modest, well-evidenced settlement clearly beats mobilising a full works programme.
- The remaining scope is tiny and the cost of mobilising a contractor outweighs the saving.
Outside those situations, settling almost always means paying more than the works would have cost. The trap most tenants fall into is leaving it too late and being forced into a settlement they could have avoided.
Where Section 18 fits
You will see Section 18 of the Landlord and Tenant Act 1927 raised a lot in dilapidations. It caps the landlord’s damages at the loss in value of the building caused by the disrepair — and if they plan to refurbish or redevelop, that loss may be small or even nil.
Section 18 is a genuinely useful lever — but it is best used to strengthen your position while you arrange to do the works, not as a route to a drawn-out settlement. The cleanest, cheapest outcome is still to discharge the liability by completing the works to specification and handing back a building the landlord must accept. A specialist contractor working alongside your surveyor will use every legitimate argument — Section 18, betterment, items outside your liability — to shrink the scope you actually have to deliver.
How to make sure you’re on the cheaper side
Three things keep you on the right side of the gap:
- Get a contractor price before you negotiate anything. You cannot tell whether a settlement offer is good or bad until you know what the works actually cost to deliver. A fixed-price quote is your benchmark — and often your best negotiating tool.
- Challenge the schedule. A specialist (or a building surveyor working with one) will typically identify 20–30% of items that are inflated, betterment, or outside your legal liability under the lease. Removing them shrinks the scope and makes the works route cheaper still. The RICS dilapidations guidance sets the framework both sides should be working to.
- Start early. Engage a contractor 6–9 months out for a budget price, and lock in your programme 8–12 weeks before handover. The earlier you start, the more your options stay open — and options are what keep the cost down.
For a full breakdown of what each element costs, see our 2026 dilapidations cost guide.
Get a fixed-price quote before you settle
London Dilaps is a specialist office dilapidations contractor working exclusively across London. We physically carry out the strip-out, Cat A reinstatement, M&E reinstatement and redecoration your schedule requires — we are not a surveyor, broker or middleman.
Send us your Schedule of Dilapidations (or your lease and a few photos if it hasn’t been served yet) and we’ll give you a free, fixed-price quote to deliver the works, normally within five working days. In almost every case it will come in well below the landlord’s claim figure.
Don’t pay a settlement until you’ve seen a delivery quote — it’s the single most expensive mistake London tenants make at lease end.