Section 18 Valuations Explained
A Practical Guide to Diminution Valuation in Dilapidations for Landlords and Tenants What is a Section 18 Valuation?
Samantha Johnson
6/13/20262 min read
A Practical Guide to Diminution Valuation in Dilapidations for Landlords and Tenants
What is a Section 18 Valuation?
A Section 18 valuation, often referred to as a diminution valuation, assesses the reduction in value of a property caused by disrepair at lease expiry.
It is derived from Section 18(1) of the Landlord and Tenant Act 1927, which limits the damages a landlord can recover in a dilapidations claim.
In simple terms:
A landlord’s dilapidations claim cannot exceed the actual diminution in value of the property caused by the tenant’s breach.
This ensures that landlord and tenant disputes are resolved based on real market impact, rather than the theoretical cost of works.
Why Section 18 Valuations Matter in Dilapidations
In many dilapidations claims, the schedule of works prepared by a building surveyor can produce significant cost estimates.
However, these costs do not always reflect:
What the market would actually pay
Whether the works would realistically be undertaken
The landlord’s true financial loss
A diminution valuation under Section 18 introduces a valuation-based cap, ensuring the claim reflects market reality.
For both landlord and tenant, this is often the key mechanism in negotiating a fair settlement.
How a Diminution Valuation is Undertaken
At Delaford Property Consultants, our Section 18 valuations follow a structured and evidence-led approach:
1. Value in Current Condition (Disrepair)
Assessment of the property in its actual state at lease expiry.
2. Value in Repair (Lease Compliant Condition)
Assessment of the hypothetical value assuming full compliance with lease obligations.
3. Diminution in Value (Diminution Valuation)
The difference between these two values represents the maximum recoverable damages in a dilapidations claim.
Key Considerations in Section 18 and Dilapidations
Supersession
Supersession is one of the most important concepts in any Section 18 valuation.
Where a landlord intends to:
Redevelop
Refurbish
Reconfigure the property
Certain repair items may be superseded, meaning they have no impact on value.
If works would not have been undertaken in any event, they should not form part of the diminution valuation.
This is a critical issue in many landlord and tenant dilapidations disputes and can significantly reduce a claim.
Why Delaford Property Consultants?
At Delaford, we combine:
Specialist expertise in diminution valuations and Section 18 valuations
Extensive experience in landlord and tenant dilapidations matters
A clear understanding of market behaviour across property sectors
Our advice is:
Commercially focused
Evidence-led
Robust and defensible in negotiation
Get Expert Advice on Section 18 and Dilapidations
If you are involved in a dilapidations dispute and require a Section 18 or diminution valuation, we would be pleased to assist.
We provide clear, practical advice to both landlord and tenant clients, ensuring claims are aligned with true market value.
