A lease usually contains express covenants, or agreements, between the parties. For example, a lease agreement may require the tenant to keep some parts of the property in good repair, and the landlord may have repairing obligations over another part. Certain covenants may also be implied into the lease by statute or common law.
If a covenant is breached, a landlord can bring damages for the devaluation the breach has caused to their reversion (ie the value of the property once the lease ends and it passes back to the landlord), and a tenant can bring damages for the difference between the value of the lease with the covenant performed, and its value now it has not been performed. Damages can also be claimed for inconvenience, stress and damaged items caused by the breach, and the parties can seek that the covenant in question be performed, or that a party be forced to stop a certain action that is causing damage.
A landlord’s claim for damages will often also include a claim for possession of the premises, either to enforce a right of forfeiture of the lease or because the term of the lease has expired. Where the matter involves a tenancy of 7 or more years, and 3 or more of those years remain unexpired, the landlord cannot progress a claim for possession unless they serve on the tenant a s146 Notice (under the Law of Property Act 1925). This notice must set out:-
- Details of the breach;
- If the breach can be remedied, a request for this to be done;
- A request for compensation in respect of the breach; and
- Inform the tenant that he is entitled to claim the benefit of the Leasehold Property (Repairs) Act 1938, which means that within 28 days he can reply stating that the landlord must obtain Court permission to proceed with the action for possession.
However, before a s146 Notice can be deemed valid and proceedings for possession can be commenced, either the tenant has to admit the breach, or a determination by a Court or the First Tier Tribunal (Property Chamber) will be required that the breach has occurred.
Restriction of Forfeiture for Breach of Covenant
Even once the above required are complied with, the landlord cannot seek forfeiture of the lease unless the tenant has failed within a reasonable time to remedy the breach or make reasonable compensation for the breach.
Defences to a Claim for Possession
If the landlord has made a demand for rent after being aware of a breach, the landlord is no longer entitled to seek forfeiture. Similarly, if a tenant offers rent, the landlord must reject it so as not to waive their right to claim there has been a breach of the lease.
If a landlord is proceeding against a tenant for possession of the property, and the tenant does not agree to the action, the tenant may apply to the court for relief. Sub tenants and those with a mortgage over the property are entitled to seek relief in the same way.
The threat to determine, or bring about an end to the lease due to breach of covenant can be a powerful tool in seeking a remedy to a breach. However, as can be seen there are several hurdles for landlords to overcome before being able to actually terminate a lease and take possession of a residential property. Should you be under threat of such proceedings or if you are seeking action against a tenant, legal advice should be sought to ensure you comply with the sometimes complex requirements of these actions.
Gareth specialises in Civil Litigation and Dispute Resolution, and can assist where such problems have arisen. He can be contacted at email@example.com or on 01702 348 384.
To minimise the risk of such problems arising, Frances White can offer assistance to landlords and tenants in the negotiation of their leases. She can be contacted at firstname.lastname@example.org or on 01702 348 384.
Nothing in this publication should be regarded by any person as advice or in the nature of advice: it should not be relied on; and the author assumes no liability whatsoever to any person.