Michaelmas quarter day falls on 29 September, and with it a wave of UK commercial lease breaks, renewals and expiries. If your business occupies leased premises, there is a decent chance the air conditioning is about to become somebody’s problem — and a lot of tenants only find out it is theirs when a schedule of dilapidations lands on the desk with a five-figure number next to “M&E installations”.
Air conditioning is one of the most commonly disputed items in end-of-lease claims. It is expensive, its condition is hard to argue about from memory, and the paperwork that would settle the argument is usually missing. Here is what actually drives liability, and what you can do about it before the lease runs out.
Why air conditioning attracts such large claims
Most commercial leases in the UK are full repairing and insuring (FRI), and most contain a covenant to keep plant and installations in good repair and working order, plus a “yield up” clause requiring the premises to be handed back in that condition. Mechanical and electrical installations — air conditioning, ventilation, heating, controls — sit squarely inside those obligations.
The commercial problem is that air conditioning has a finite life. A VRF system installed at the start of a 15-year lease will be at or near end of life when that lease expires. If the covenant is “keep in good working order” and the system no longer works properly, the landlord’s surveyor will price a replacement, not a repair. That is where claims jump from thousands to tens of thousands.
The three schedules you might see
- Interim schedule — served during the lease term, usually where the landlord wants breaches remedied now rather than at the end.
- Terminal schedule — typically served in the last three years of the term, listing breaches to be put right before expiry.
- Final schedule — served after the lease has ended, normally alongside a quantified demand for damages.
The RICS professional standard and its pre-action protocol set out how these are prepared and answered. None of that is our field — you want a chartered building surveyor and, where the sums are large, a solicitor. What we can tell you is what the surveyor will be looking at when they reach the plant room.
What the surveyor actually checks
| Item | What weakens your position | What strengthens it |
|---|---|---|
| Service history | Gaps, or no records at all | Continuous PPM records for the full term |
| System operation | Units off, in fault, or not cooling | All units tested and operating on handover day |
| Refrigerant records | Repeated top-ups, no leak-check log | F-Gas records complete and up to date |
| Filters and condition | Blocked filters, corroded casings, damaged grilles | Cleaned, inspected, photographed |
| Tenant alterations | Units moved for a fit-out with no licence to alter | Documented consent, or reinstatement priced early |
| Condensate and drainage | Visible water damage to ceilings below | Drains clear, no staining |
Two of those rows carry disproportionate weight. Service history is the first: a system with an unbroken maintenance record is very hard to characterise as neglected, even when it is old, while a system with no records is assumed to have been run into the ground.
Refrigerant is the second. Repeated top-ups are documentary evidence of an unrepaired leak — a dilapidations problem and an F-Gas compliance one, and with R410A prices having risen sharply in 2026, an expensive one. Our compliance page covers the record-keeping obligations.
Three things that change the answer entirely
1. A schedule of condition at lease start
If a photographic schedule of condition was agreed when you took the lease, your repairing obligation is usually limited to returning the plant in no worse condition than recorded. If you are negotiating a new lease now, this is the single most valuable protection available on the M&E items, and it costs a fraction of what a later dispute will.
2. Who owns and controls the plant
Where the landlord retains the air conditioning, appoints the maintenance contractor and holds the compliance records, the cost usually flows through the service charge rather than a dilapidations claim. Where the tenant installed the system as part of a fit-out, it may be a tenant’s fixture the landlord can require to be removed — reinstatement, not repair. Read the lease and the licence to alter before assuming either.
3. The section 18(1) cap
Under section 18(1) of the Landlord and Tenant Act 1927, damages for breach of a repairing covenant cannot exceed the amount by which the value of the landlord’s reversion is actually reduced by that breach. If the landlord is stripping the floor out for a redevelopment anyway, a claim for a new VRF system may not survive that test. This is a valuation argument for a surveyor to run, not something to rely on without advice — but it is why quantified demands are so often settled well below the opening figure.
What to do, and when
- Three years out: get a plant condition report. You need to know whether you are facing a service-and-tidy exercise or a replacement argument while there is still time to influence it.
- Two years out: fix the leaks. A system topped up every year will not pass inspection and is costing you refrigerant at 2026 prices in the meantime.
- Twelve months out: assemble the file — service sheets, F-Gas records, commissioning certificates, O&M manuals, alteration consents. Missing documents can often still be reconstructed at this stage. After expiry they cannot.
- Break clause? Check whether it is conditional on compliance with repairing covenants. Conditional breaks are construed strictly, and a failed break costs far more than the dilapidations would have.
- Before handover: full service of every unit, filters cleaned, faults cleared, and a dated photographic record of the plant working.
Landlords should run the same exercise in reverse. Knowing the true condition and remaining life of the plant before you negotiate tells you whether to claim for replacement or take a cash settlement and re-let with the existing system.
Get the plant position straight before the lease does
AKS Air Conditioning has 34+ years of experience installing and maintaining commercial systems, covering around 300 sites across the North West and nationally for clients including Deichmann, Footasylum, B&M, AO and Fitness First. As Daikin and Mitsubishi partners, we survey, service and replace every age of system you are likely to have inherited.
We will inspect the air conditioning and ventilation at your premises and report on condition, remaining life and outstanding faults. Where the answer is that the system simply needs looking after properly for the rest of the term, a planned maintenance contract is the cheapest defence there is — the records it generates are exactly what a dilapidations claim struggles against.
Call AKS Air Conditioning on 01704 833 755 or get in touch here to arrange a pre-dilapidations plant condition survey.
