When a tenant breaches the terms of their lease, the landlord might look to the forfeiture provisions to leverage a solution.
Forfeiture is the right for a landlord to end a lease and re-enter / repossess the property. Given that the tenant could lose their property, the threat of forfeiture is often enough to bring a tenant back into compliance with the terms of their lease.
However, there are laws in place to protect residential long-leaseholders and it is common for many landlords to fall foul of these requirements, rendering their efforts invalid, and potentially leaving them without the ability to recover their legal costs.
Therefore, landlords beware –
- It is unlawful to re-enter a residential premises other than by court proceedings.
- Check the right to forfeit is available. If there is no forfeiture provision in the lease, then there is no right to forfeit.
- Check the forfeiture provisions are clear and the right to forfeit has arisen. The courts will not make inferences where the terms of the lease are ambiguous.
- Specific notices are required. Be careful to comply with the Commonhold and Leasehold Reform Act 2022, which dictates:
- With respect to rent, that the tenant is not liable to make payment until a “Section 166 Notice” is served;
- With respect to other breaches, that unless the tenant has admitted the breach, a First Tier Tribunal determination must be obtained before a “Section 146 Notice” can be served;
- Ensure that you do not “waive” the right to forfeit. Once a landlord knows that the tenant is in breach, they must decide whether to forfeit or continue the lease. If a landlord performs an act in continuance of the lease, such as demand or accept rent after knowledge of the breach, then they might have waived their right to forfeit. Protect your right by putting a freeze on rent.
- Check if there is a mortgage over the property, as the lender might be willing to remedy the breach to protect their security over the loan, and add the monies paid to the tenant’s mortgage.
The courts have a very wide discretion on whether to grant relief to the tenant, and will take the view that the right to forfeit is merely a mechanism to enforce the terms of the lease. Provided that the landlord can be put in a position they would have been in had the breach not occurred then relief should normally be granted. This would usually (but not always) involve payment of the landlord’s reasonable legal costs.
Early legal advice is advised to avoid the numerous pitfalls and the detrimental impact of issues that are likely to arise.