Block Management for Landlords
Breach and Forfeiture of the Lease
Breach of Lease
Every lease contains several covenants (effectively, enforceable promises) by leaseholders in respect of how they will and will not treat the property. These usually contain prohibitions or restrictions on actions such as:
- altering the property,
- sub-letting or assigning it,
- keeping pets,
- making noise or causing a nuisance etc,
With the goal of protecting the freehold interest and the neighboring properties.
Unfortunately, leaseholders aren’t always advised of their obligations or simply ignore them and you could be faced with a situation where one of your leaseholders is breaching their lease to your detriment and you need to take immediate action. It might also be the case that the lease contains provision for you to take action against one leaseholder, at the request of another (usually subject to the complainant leaseholder paying your costs).
As a landlord, you have a number of options available to you:
Subject to there being a right to do so within the lease, you might be entitled to forfeit the lease (essentially, take the property back). As this could mean a leaseholder losing their investment or home and you achieving a windfall, the courts are naturally quite reluctant to grant it and there are some statutory controls. For example, for a breach of covenant other than to pay rent, you will need the leaseholder to either, a) admit the breach or, b) have it determined by a court or tribunal, before you can serve a “Notice Before Forfeiture” (Notice pursuant to s.146 of the Law of Property Act 2016).
Often you will need a Tribunal or Court to order forfeiture. We can assist you with this and ensure you follow the procedure required. Firstly you need to prepare a document called a “Notice”. This requires a leaseholder to remedy the breach if it is capable of being remedied. If they do not do so, you can then proceed to apply to Court for possession based on forfeiture. At that stage, the leaseholder might apply for relief from forfeiture which a Court would usually grant subject to certain conditions such as remedying the breach and paying your costs.
It is important that, if your leaseholder is in breach, you do not take any action to recognise the continuing existence of the lease (e.g. by undertaking any acts consistent with it such as demanding rent). You must treat the lease as having ended otherwise the right to forfeit will be waived / lost.
If the right to forfeit has been waived, or if it is the Management Company who are seeking to take action against a breach (who do not have a right to forfeit leases), another common method of enforcement is by applying to court for an injunction. The courts can grant an order forcing the leaseholder to do something, or ordering them to stop doing something. This is commonly used for parking breaches or breaches of nuisance clauses, but can apply to most breaches.
If your leaseholder has breached their lease (e.g. by altering the property without your consent), it might be that the breach is beneficial to you or you consider it a justifiable breach. In these cases, you can enter into a retrospective licence or give your consent.
Each case will need to be taken on its own facts and we will be able to offer bespoke advice and guide you through the various options dependent on what your objectives are. Please contact us to discuss any specific cases and we will be happy to assist.