Forfeiture of Residential Leasehold UK

The Section 168 Requirement — FTT Determination First

The central protection for residential long leaseholders is contained in section 168 of the Commonhold and Leasehold Reform Act 2002 (CLRA 2002), which amended section 168 of the Landlord and Tenant Act 1985. A landlord of a dwelling may not serve a section 146 notice (which is the preliminary notice required to commence forfeiture proceedings for breach of a non-payment covenant) unless the breach has first been admitted by the leaseholder or determined by a court, the First-tier Tribunal (Property Chamber), or arbitration. This procedural gate means the landlord must first obtain a tribunal or court determination that the breach exists and is of sufficient gravity before they can even begin formal forfeiture proceedings. For service charge disputes — where the tenant denies owing the amount claimed — this can add months or years to the process.

• CLRA 2002 s.168: s.146 notice cannot be served until breach is admitted or determined by FTT/court/arbitration
• FTT determination: landlord must apply to the First-tier Tribunal (Property Chamber) for a determination that a breach has occurred
• Service charges: if tenant disputes the service charge, breach cannot be established until FTT determines the amount is payable
• Admitted breach: if the leaseholder expressly admits the breach in writing, s.146 notice can be served without a FTT determination
• Commercial vs residential: section 168 applies ONLY to dwellings — commercial leases are not subject to this requirement

Ground Rent Arrears — Additional Protection Under Section 167

Section 167 of the CLRA 2002 provides additional protection specifically for residential long leases where the landlord seeks forfeiture for failure to pay rent (including ground rent). A landlord cannot forfeit a residential long lease for rent arrears unless: (a) the outstanding amount exceeds £350; or (b) any part of the sum has been outstanding for more than 3 years. Both conditions must be considered — if ground rent arrears are small and recent, the landlord cannot forfeit. Since the Leasehold Reform (Ground Rent) Act 2022, all new long residential leases granted after 30 June 2022 must have a peppercorn ground rent (i.e. zero). As a result, section 167 primarily affects pre-June 2022 leases where a substantive ground rent is still being collected.

• CLRA 2002 s.167: cannot forfeit for rent arrears where amount is ≤£350 AND has been outstanding <3 years
• Both conditions apply: if arrears are under £350 OR have been outstanding less than 3 years — forfeiture barred for rent alone
• Leasehold Reform (Ground Rent) Act 2022: new long leases granted after 30 June 2022 must have peppercorn (zero) ground rent
• Pre-June 2022 leases: many still have substantive ground rents — s.167 applies to these
• MOLS: if arrears exceed threshold, still need s.168 procedure (FTT determination or admission) before s.146 notice

The Section 146 Notice — Procedure After FTT Determination

Once a breach has been determined by the FTT (or admitted by the leaseholder), the landlord must then serve a section 146 notice under the Law of Property Act 1925. This notice must: specify the breach; require the leaseholder to remedy the breach if it is capable of being remedied; and require the leaseholder to pay reasonable compensation. There is no set minimum period in the section 146 notice, but the landlord must give the leaseholder a reasonable time to remedy the breach before commencing forfeiture proceedings. Courts have required anything from 3 months to 2 years depending on the nature of the breach. Only after an adequate section 146 notice has been served, and the breach not remedied, can the landlord commence possession proceedings in the County Court.

• s.146 LPA 1925 notice: must specify the breach; require remedy (if remediable); require compensation
• Reasonable period to remedy: courts have required 3 months to several years — no fixed minimum in statute for residential
• Irremediable breaches: some breaches cannot be remedied (e.g. criminal conviction, some assignments) — remedy requirement waived
• After notice served: if leaseholder does not remedy within reasonable time, possession proceedings can be commenced in County Court
• Civil proceedings: County Court — not FTT — has jurisdiction to grant possession and a forfeiture order

Waiver of Breach

Waiver is one of the most dangerous traps for landlords attempting to forfeit. If a landlord, knowing of a breach, takes any step that is inconsistent with treating the lease as continuing — most commonly, demanding or accepting rent — the right to forfeit for that breach is waived. Once waived, the breach (if not continuing) cannot be relied upon for forfeiture. Even a letter demanding rent, a service charge demand, or acceptance of a direct debit payment can constitute waiver. As soon as a landlord becomes aware of a breach that may justify forfeiture, they must immediately stop demanding and accepting rent — and seek urgent legal advice before any further communication with the leaseholder. Breach of a continuing covenant (for example, an obligation not to sublet without consent where the subletting is ongoing) cannot be finally waived — it is waived only for the period covered by the rent accepted.

• Waiver: any act by the landlord, knowing of the breach, that is inconsistent with treating the lease as forfeited = waiver
• Common waiver acts: demanding rent; accepting rent; sending service charge demands; issuing forfeiture proceedings after waiver act
• Once waived: one-off breach cannot be relied upon for forfeiture — fresh breach required
• Continuing breach: cannot be finally waived — waived only for the period to which the rent relates
• Practical advice: stop all demands and acceptance of money the moment a breach justifying forfeiture is discovered; take legal advice immediately

Relief from Forfeiture

Even where a landlord successfully obtains a forfeiture order, the leaseholder has a right to apply to the court for relief from forfeiture under section 146(2) of the Law of Property Act 1925. Courts have a very wide discretion to grant relief on such terms as they think fit — usually requiring the leaseholder to remedy the breach, pay outstanding sums, and pay the landlord's costs. Courts are extremely reluctant to allow forfeiture of a valuable long residential lease (which may represent the leaseholder's main asset and home) for a minor or technical breach. Relief will almost always be granted where: the breach is capable of remedy; the leaseholder pays all arrears and costs; and there is no persistent history of breach. In practice, forfeiture of a residential long lease almost never results in the landlord obtaining possession without the court granting relief.

• Relief from forfeiture: s.146(2) LPA 1925 — County Court can grant relief on any terms it thinks fit
• Court discretion: very wide; courts strongly favour granting relief for valuable long leases
• Conditions for relief: remedy the breach; pay arrears; pay landlord's costs
• Chesterton v Avondale Properties: courts will rarely allow forfeiture for a minor breach where the lease has significant value
• Sub-tenant protection: sub-tenants of a forfeited lease can also apply for relief (LPA 1925 s.146(4))

Practical Use — When Forfeiture Is and Is Not Appropriate

Given the procedural obstacles — FTT determination first, s.146 notice, reasonable remedy period, court proceedings, and near-certain relief being granted — forfeiture of a residential long lease is an expensive and time-consuming remedy that rarely achieves its objective. In practice, it is used as leverage in disputes rather than as a realistic possession mechanism. Where a landlord genuinely wants to end a long lease — for example because the property has been abandoned or used for criminal purposes — other remedies (management orders, anti-social behaviour injunctions, surrender negotiations) are usually more effective. The main practical use of forfeiture in residential leasehold is to compel payment of disputed service charges, where the credible threat of forfeiture proceedings encourages settlement.

• Realistic use case: leverage in service charge or ground rent disputes — threat of proceedings encourages settlement
• Not a quick remedy: FTT determination + s.146 notice + County Court proceedings + relief application = 2–5 years minimum
• Near-certain relief: courts almost always grant relief on terms — landlord recovers costs and arrears but not the lease itself
• Alternatives: management order (LTA 1987); ASBI injunction; surrender negotiation; rent repayment order (for rent-regulated elements)
• Legal advice essential: attempt at forfeiture without specialist leasehold solicitor is likely to result in waiver, procedural invalidity, or unlawful eviction liability

Frequently asked questions