Forfeiture and Coronavirus – What can Landlords do?

The Coronavirus Act 2020 imposed a suspension on the forfeiture of most business tenancies – those to which Part 2 of the Landlord and Tenant Act 1954 applies even if contracted out of the protection of that Act – on the grounds of non-payment of rent, which is defined as all sums due under a relevant lease, between 26 March 2020 and 30 June 2020. That period was subsequently extended and is due to expire on 31 March 2021. This means that a landlord cannot exercise a right to forfeit a lease on the basis of a tenant’s non-payment of rent during this period.

It is worth noting that during the period of suspension, a landlord will not be regarded as waiving its right to forfeit for non-payment of rent unless it expressly confirms such a waiver in writing. As a result, once the suspension period has expired, the landlord could forfeit the lease on the basis of the tenant’s non-payment of the rent which accrued during the suspension if this remains unpaid.

As this suspension only applies to forfeiture on the basis of non-payment of rent, if a landlord has a right of forfeiture on any other grounds, it could still exercise this right should these grounds arise by way of peaceable re-entry where this is possible without using force against anyone present in the premises who opposes re-entry and where it does not involve evicting anyone lawfully residing at the premises. Where the premises comprise some residential element this means forfeiture by peaceable re-entry is unlikely to be possible.

It is also possible to commence proceedings for forfeiture for breaches other than failure to pay sums due under a lease.

Landlords should be aware that if they wish to exercise a right of forfeiture of this nature, they must first serve a notice on the tenant under section 146 of the Law of Property Act 1925 (LPA 1925). That notice must give the tenant a reasonable amount of time to remedy the breach, if they are capable of doing so, and it is only after that reasonable period of time elapses that a landlord is entitled to forfeit the lease. The tenant may also apply to the court for relief from forfeiture.

Clearly in the current climate a landlord should consider the risk of a possible void and its rates liability in deciding whether forfeiture is a desirable option.