Cap on damages for breach of a tenant's repairing covenant (LTA 1927, s.18(1))
Thornbury Logistics Ltd held a 12-year lease of a warehouse in Leeds, which expired on 30 June 2026. The lease contained a covenant to keep the premises in good repair and to yield them up in that condition at the end of the term. Thornbury left the roof and cladding in disrepair. The landlord's surveyor puts the cost of the remedial works at £120,000. A valuer reports that the disrepair has reduced the value of the landlord's reversion by £70,000. The landlord intends to re-let the warehouse in its existing form and has no plans to demolish or alter it.
What is the maximum the landlord can recover as damages for breach of the repairing covenant?
Choose one answer to see the reasoning.
Worked answer
Correct answer B: £70,000, the amount by which the value of the reversion is diminished by the breach.
THE RULE TO REMEMBER
Damages for breach of a tenant's repairing covenant cannot exceed the diminution in value of the landlord's reversion caused by the breach.
Cap on damages for breach of a tenant's repairing covenant (LTA 1927, s.18(1))
Section 18(1) of the Landlord and Tenant Act 1927 provides that damages for breach of a covenant to keep or put premises in repair during the lease, or to leave or put them in repair at its end, shall in no case exceed the amount (if any) by which the value of the reversion is diminished owing to the breach. The cap applies whether the claim is brought during the term or after the lease ends. The landlord can therefore recover no more than the diminution in value of its reversion, here £70,000, even though the works would cost £120,000. The second limb of s.18(1), which removes damages entirely where the premises would be pulled down or structurally altered at or shortly after termination, does not apply because the landlord intends to re-let the warehouse as it is. Landlords often seek to recover dilapidations as a debt under a Jervis v Harris clause during the term, because that route avoids the s.18 cap.
Why A is wrong: The cost of works is recoverable only up to the diminution in the value of the reversion under s.18(1).
Why C is wrong: There is no rule averaging the two figures; the diminution in value is the ceiling.
Why D is wrong: A terminal dilapidations claim for breach of a covenant to yield up in repair is expressly contemplated by s.18(1).
Why E is wrong: The s.18(1) cap applies to covenants to repair during the term and to leave the premises in repair at its end.
A little more practice done.
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