SJ_Property_June 2010_pg4 08/06/2010 16:23
residential
Word play
Landlords wishing to forfeit leases may unknowingly serve misleading information
on their tenants, say John Alcock and Kai Graf von Pahlen
THE MISUSE OF words has seemingly
created inconsistencies in the Commonhold
and Leasehold Reform Act 2002 and the
Landlord and Tenant (Notice of Rent) (Eng-
land) Regulations 2004 (Statutory Instrument
2004 No. 3096). So, arguably, landlords wish-
ing to forfeit their leases and being required
to serve on the tenant a prescribed notice are
currently providing their tenants with inac-
curate information. Legal practitioners have
to consider if and how they can prevent their
landlord clients from serving potentially
misleading information on their tenants.
Forfeiture notice
Section 166(1) of the 2002 Act provides that
a precondition of a landlord’s right to recover
rent under a long lease of a dwelling is the
service on the tenant of a prescribed notice
requiring payment of the rent due.
A useful, if draconian, remedy for the land-
lord is the threatened forfeiture of the lease if
the tenant fails to pay the rent. In that case,
the landlord of course has to send his tenant
a prescribed notice first. Otherwise, the land-
lord will be deprived from forfeiting the
lease for non-payment of rent because no
rent is owed.
Moreover, in relation to failures of tenants
to pay small amounts for short periods,
section 167(1) of the 2002 Act specifies:
“A landlord under a long lease of a dwelling
may not exercise a right of… forfeiture for
failure by a tenant to pay… rent… unless the
unpaid amount (a) exceeds the prescribed
sum [currently £350], or (b) consists of or
includes an amount which has been payable
for more than a prescribed period [currently
three years].”
4 SJ Property Focus June 2010
Page 4
This means that a landlord may not forfeit
his lease unless either the rent due is in excess
of £350 or has been payable for more than
three years.
The regulations
It has been established that a landlord who
wishes to forfeit the lease must send his ten-
ant a prescribed notice under section 166 of
the 2002 Act. The schedule under the 2004
regulations specifies that a notice required
by section 166 must contain the following
wording: “Section 167 of the [2002 Act] and
regulations made under it prevent your
landlord from forfeiting your lease for
non-payment of rent… if the amount owed
is £350 or less, or none of the unpaid amount
has been outstanding for more than
three years.”
This wording is, no doubt, intended to
assist the tenant in understanding his legal
rights under section 167 of the 2002 Act. But,
giving the words their ordinary and natural
meaning, the above sentence conveys to the
tenant that the landlord may not forfeit the
lease if the rent due is below £350 or the rent
has been payable for less than three years, so
the landlord may only so forfeit if both the
rent due is in excess of £350 and has been
payable for more than three years.
Inconsistencies
So, there appear to be inconsistencies
between the 2002 Act and the 2004 regula-
tions. For example, if one assumes that the
rent outstanding is less than £350, but has
been outstanding longer than three years,
then the landlord would be entitled to forfeit
the lease under section 166 of the 2002 Act
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because the rent has been outstanding for
longer than three years. However, if the
landlord follows the 2004 regulations, he
would serve on the tenant a notice which,
incorrectly, specifies that the landlord may
not forfeit the lease because the amount out-
standing falls below £350. In simple terms,
the 2002 Act specifies that the landlord may
forfeit if one of two conditions is satisfied;
however, the 2004 regulations force the
landlord to communicate to the tenant that
both conditions have to be satisfied for the
landlord to forfeit, which is not true.
What to do?
Presumably, a prescribed notice given under
section 167 of the 2002 Act, which follows
the requirements under the 2004 regula-
tions, would be valid in law. The landlord,
however, would have made a potentially
misleading statement to the tenant. One
could foresee a situation where a tenant
would be induced into a false sense of secu-
rity if he relies on his mistaken belief that the
landlord has to fulfill two conditions in
order to forfeit when, in fact, the landlord
only has to fulfill one. Tenants could,
therefore, conceivably argue that negligent
misstatements were made to them by
their landlords.
Landlords should then ‘cure’ the effect of
the 2004 regulations and include a statement
in their covering letter to the tenant which
properly explains the meaning of section
167 of the 2002 Act.
John Alcock is a consultant and
Kai Graf von Pahlen is a trainee solicitor at
Davis Blank Furniss Solicitors
www.solicitorsjournal.com