Forfeiting a lease: a lifeline for commercial landlords
- AuthorJosh Millichamp
Business tenancies are protected by the Coronavirus Act 2020, restricting the landlord’s ability to forfeit a lease for non-payment of rent, at least until the end of March 2021.
However, if a tenant is in breach of any other lease obligations, it is still possible for a landlord to forfeit a commercial lease.
A landlord can serve a section 146 notice on the tenant warning that there have been breaches of the lease that require remedy (if that is possible). The notice must detail all breaches of the lease, and stipulate that the lease is at risk of being terminated if the breaches are not remedied within a period of time.
However, it would be wise to consider whether it is in the landlord’s commercial interests to take the property back. If the landlord believes that a new tenancy could be granted on similar or superior terms, it may want to take the property back. However, if the property is likely to be vacant for some time, or the market no longer supports similar letting terms, the landlord may want to keep the existing tenancy in place and pursue alternative remedies which may compensate the landlord for the breach and secure future performance of the tenant's covenants.
It can sometimes be worthwhile for a landlord to serve a section 146 on a tenant who is in breach of the lease, even where the landlord may not actually intend to proceed to forfeit the lease. Service of the notice may prompt the tenant into remedying the breaches of the lease.
For help and advice on lease forfeiture or any other landlord/tenant dispute matters, email Josh Millichamp or call our Dispute Resolution team on 0800 118 1500 to find out how we can help you.