Forfeiture of a residential lease

Osbornes Law acts for leaseholders facing forfeiture of a residential lease, and for freeholders and management companies who need to enforce a lease properly. Our property litigation team is recognised in Legal 500 and Chambers UK.

If you have had a letter threatening forfeiture, or a section 146 notice has landed on your doormat, the situation is serious but it is rarely as final as the letter makes it sound. Forfeiture ends your lease and hands your home back to the freeholder, usually with no compensation for the value you lose. That is why Parliament has wrapped the process in restrictions.

Most leaseholders who take advice early keep their flat. The freeholder has to get every step right, and many do not. We look at what you are actually accused of, whether the freeholder was entitled to act at all, and how quickly we can stop the process.

We also act on the other side. If you are a freeholder, a residents’ management company or a right to manage company dealing with a leaseholder who will not pay or will not comply, we will tell you honestly whether forfeiture is realistic and what the alternatives are.

What is forfeiture of a residential lease?

Forfeiture is a freeholder’s right to bring a lease to an end early because the leaseholder has broken its terms. The right has to be written into the lease itself. Almost every long residential lease contains a forfeiture clause, usually described as a right of re-entry.

If forfeiture succeeds, the lease is over. The flat reverts to the freeholder and the leaseholder loses the capital value of the property. For a London flat that can mean losing hundreds of thousands of pounds over an unpaid bill of a few thousand.

Courts understand how harsh that is. In practice, forfeiture is far more often used to force payment or compliance than as a genuine attempt to take possession of someone’s home. Recognising that difference early changes how you respond.

Your freeholder cannot change the locks

This is the single biggest difference between residential and commercial leases, and it matters enormously.

In a commercial setting a landlord can often forfeit by peaceable re-entry, meaning they instruct agents to attend the premises overnight and change the locks. That route is not available against an occupied home.

Section 2 of the Protection from Eviction Act 1977 provides that where premises are let as a dwelling on a lease subject to a right of re-entry or forfeiture, it is not lawful to enforce that right other than by proceedings in the court while any person is lawfully residing in the premises or part of them.

So if you live in your flat, or you have tenants or family living there lawfully, your freeholder must go to court. A freeholder who changes the locks instead is acting unlawfully, and that opens up claims against them. If this has happened to you, contact us immediately.

If you are dealing with a business premises rather than a home, our separate guidance on forfeiture of a commercial lease covers the different rules that apply there.

The small debt rule: under £350 or under three years

A freeholder cannot forfeit a long lease of a dwelling over a small or recent debt.

Section 167 of the Commonhold and Leasehold Reform Act 2002 prevents a landlord exercising a right of re-entry or forfeiture for failure to pay rent, service charges or administration charges, or a combination of them, unless the unpaid amount either exceeds a prescribed sum, or consists of or includes an amount which has been payable for more than a prescribed period.

In England those figures are set by the Rights of Re-entry and Forfeiture (Prescribed Sum and Period) (England) Regulations 2004. The prescribed sum is £350. The prescribed period is three years.

In plain terms, for a flat in England the freeholder needs either more than £350 outstanding, or some part of the debt owing for more than three years. Below both thresholds, forfeiture is simply not available to them, however forcefully the letter is worded.

Check the arithmetic carefully. Freeholders sometimes reach the £350 figure only by adding administration charges and legal costs that you may be able to challenge separately.

Unpaid service charges must be agreed or determined first

If the dispute is about service charges or administration charges, there is a further protection.

Section 81 of the Housing Act 1996 stops a landlord exercising a right of re-entry or forfeiture for failure to pay a service charge or administration charge unless the amount has been finally determined by the appropriate tribunal, a court or an arbitral tribunal, or the tenant has admitted that it is payable. The same restriction applies to serving a section 146 notice. Even after a final determination, the landlord must wait 14 days.

This is why so many leasehold disputes begin at the First-tier Tribunal (Property Chamber) rather than in court. If you dispute the service charge, saying so matters. An amount you have never admitted and no tribunal has determined cannot be the basis for forfeiture.

We regularly challenge service charge demands on reasonableness, on consultation failures, and on whether the work fell within the lease at all.

Ground rent has to be properly demanded

Ground rent is not payable simply because the lease says so.

Section 166 of the Commonhold and Leasehold Reform Act 2002 provides that a tenant under a long lease of a dwelling is not liable to make a payment of rent unless the landlord has given a notice relating to that payment. The date for payment must not be less than 30 days or more than 60 days after the notice is given, and the notice must be in the prescribed form.

If your freeholder never served a valid demand, the rent was not due. Arrears that were never properly demanded are a weak foundation for forfeiture, and we see this error often, particularly where a freehold has changed hands and the new owner has claimed years of back rent.

For other breaches, the tribunal decides first

Where the complaint is something other than money, subletting without consent, alterations, a pet, business use, disrepair, the freeholder cannot go straight to a section 146 notice.

Section 168 of the Commonhold and Leasehold Reform Act 2002 prevents a landlord under a long lease of a dwelling serving a section 146 notice unless one of three things has happened:

• The First-tier Tribunal has finally determined on an application that the breach has occurred.
• You have admitted the breach.
• A court, or an arbitral tribunal under a post-dispute arbitration agreement, has finally determined that the breach has occurred.

Where the breach was determined by a tribunal or court, the notice cannot be served until 14 days after the final determination.

Two points follow from this. First, never casually admit a breach in correspondence. An admission removes the freeholder’s obligation to prove anything. Second, if a section 146 notice has been served without any determination or admission, it may well be invalid.

What a section 146 notice must contain

Section 146 of the Law of Property Act 1925 requires the notice to specify the particular breach complained of, require you to remedy it if the breach is capable of remedy, and require you to make compensation in money for the breach. Forfeiture only becomes available if you fail to put things right within a reasonable time.

The Act does not define a reasonable time. It depends on what needs doing.

Note that section 146(11) provides that the section does not affect the law relating to re-entry, forfeiture or relief in the case of non-payment of rent. So a pure rent arrears case follows a different route, though the protections described above still apply.

Defects in a section 146 notice are common and they matter. A notice that fails to identify the breach properly, or demands something the lease does not require, can often be challenged.

Relief from forfeiture

Even where a freeholder has done everything correctly, the court has power to grant relief from forfeiture, meaning the lease is restored.

Where the case is about rent arrears in the county court, section 138 of the County Courts Act 1984 sets out clear routes:

• If you pay all the rent in arrear and the costs of the action into court, or to the landlord, not less than five clear days before the return day, the action ceases.
• If a possession order is made, it must be postponed for a period of not less than four weeks, and paying the arrears and costs within that period stops the order taking effect.
• If the landlord does recover possession, you may apply for relief at any time within six months from the date on which possession was recovered.

Those deadlines are strict. Missing them narrows your options considerably, which is why early advice is worth far more than late advice.

Relief is usually granted where the arrears and costs are paid, but it is discretionary, and the court will look at your conduct and how quickly you acted.

Your mortgage lender is on your side here

If your flat is mortgaged, your lender has more to lose than you do. Forfeiture wipes out the lease and with it the lender’s security.

Lenders are entitled to be notified and can apply for relief in their own right. In practice many lenders will simply pay the arrears to protect their position and add the sum to your mortgage account. That is not free money, and it will affect your relationship with your lender, but it does keep the flat.

Telling your lender early is usually better than letting them find out from the freeholder.

Is forfeiture being abolished?

Reform has been widely discussed and the government has said it intends to look at forfeiture. It is important to be clear about where things actually stand.

Forfeiture of long residential leases remains lawful in England and Wales today. The Leasehold and Freehold Reform Act 2024 made significant changes to enfranchisement, lease extensions, the right to manage and service charges, but it did not abolish or restrict forfeiture. Any change will need further legislation.

You can read our commentary on what the 2024 Act did change in our note on leasehold reform.

Until the law changes, the protections on this page are what stand between a leaseholder and the loss of their home. They are substantial, but they only help if they are used.

How we can help

For leaseholders, we will review the lease and the notices, identify whether the freeholder was entitled to act, challenge the underlying debt where it is disputed, negotiate to resolve matters without court proceedings, and apply for relief from forfeiture where proceedings have started. Where a freeholder has acted unlawfully, we will pursue them for it.

For freeholders, management companies and right to manage companies, we will advise honestly on whether forfeiture is realistic, make sure every statutory step is taken correctly so the process is not derailed, and where forfeiture is not the right tool, pursue the debt or the breach by a route that actually works.

Many of these disputes sit alongside other leasehold issues. If the underlying problem is a freeholder who will not manage the building properly, leasehold enfranchisement may be a better long term answer than fighting each dispute as it arises. Our wider property litigation team handles the full range of leasehold disputes.

Why choose Osbornes Law

Our property litigation lawyers act in leasehold disputes across London and the rest of England and Wales, for individual leaseholders and for the companies that manage blocks. The team is recognised in Legal 500 and Chambers UK.

We are used to the tactical reality of these cases. Forfeiture threats are often about pressure rather than possession, and knowing which is which changes the advice. We will tell you where you stand, not simply what you want to hear.

Speak to a leasehold forfeiture solicitor today

If you have received a forfeiture threat, a section 146 notice, or court papers, time matters. Call us on 020 7485 8811 or fill in the contact form below and we will come back to you.