Forfeiture of Commercial Lease in England and Wales: How It Works

Forfeiture is the legal right of a landlord to end a commercial lease early if the tenant breaches the lease terms, such as non-payment of rent or other covenants.

When Can a Landlord Forfeit a Commercial Lease?

A commercial lease must explicitly include a forfeiture clause to allow the landlord to take back possession. Common breaches that may trigger forfeiture include:

• Non-payment of rent
• Breach of lease covenants (e.g. unauthorised alterations, subletting, illegal use)
• Insolvency of the tenant

Methods of Forfeiture

There are two main ways a landlord can forfeit a lease:

a) Peaceable Re-entry

• The landlord physically re-enters the property and changes the locks.
• This is only legal if no one is present and should be done with extreme caution to avoid unlawful eviction claims.
• Commonly used for non-payment of rent.

b) Court Proceedings

• The landlord applies to the court for possession.
• Typically used for non-rent breaches (like Disrepair or other covenant breaches) or if peaceable re-entry is not possible.

Procedure for Non-Payment of Rent

• No prior notice is needed if the lease allows for peaceable re-entry.
• Re-entry must be done without confrontation.
• If proceeding via court, a claim for possession is issued.

Note: If the tenant pays all arrears before forfeiture or court judgment, they may avoid forfeiture.

• Procedure for Other Breaches (e.g. Disrepair)
• The landlord must first serve a Section 146 Notice under the Law of Property Act 1925.
• The notice must:
  • Specify the breach
  • Require the tenant to remedy it (if capable of remedy)
  • Require the tenant to pay compensation (if applicable)
• If the tenant fails to comply, the landlord may proceed with forfeiture (peaceably or via court).

Tenant’s Right to Relief from Forfeiture

Tenants can apply for relief from forfeiture, meaning reinstatement of the lease, if:

• They remedy the breach (e.g. pay arrears or fix the issue)
• They act within a reasonable time (usually within 6 months for rent arrears)

Courts generally favour granting relief, especially where the breach is minor or has been remedied.

Waiver of Forfeiture

If a landlord acts in a way that recognises the lease after becoming aware of the breach, such as accepting rent, they may waive the right to forfeit.

Important Legal Considerations

• Legal advice is strongly recommended before any forfeiture action.
• Unlawful forfeiture can lead to damages claims for trespass or wrongful eviction.
• Landlords must strictly follow procedures to avoid penalties.

Need Help with Commercial Forfeiture?

At the British Landlords Association, we provide legal guidance and practical support for landlords dealing with commercial lease breaches.

Whether you’re facing unpaid rent or serious covenant violations, our experts can help you protect your interests and act within the law

FAQ on Forfeiture of Commercial Leases

What is forfeiture of a commercial lease?

Forfeiture is a legal process that allows a landlord to terminate a commercial lease early when the tenant breaches the lease terms. This may occur due to non-payment of rent, breach of covenants, or tenant insolvency.

Can I forfeit a lease for rent arrears without going to court?

Yes, if the lease includes a forfeiture clause and the breach is non-payment of rent, you may be entitled to forfeit the lease through peaceable re-entry, provided no one is present on the premises.

However, this must be done lawfully and without using force.

Do I need to serve notice before forfeiting a lease?

It depends on the nature of the breach:

• Rent arrears: No notice is required before peaceable re-entry.

• Other breaches (e.g. subletting, disrepair): You must serve a Section 146 Notice before proceeding.

What is a Section 146 Notice?

A Section 146 Notice is a legal document served on the tenant for breaches of covenants (other than rent). It gives the tenant an opportunity to remedy the breach before forfeiture proceedings begin.

Can a tenant stop forfeiture once it starts?

Yes. Tenants have the right to apply for relief from forfeiture. The court often grants relief if:

• The breach is remedied quickly

• Arrears are paid in full

• The tenant acts within the statutory time limit (usually six months)

Can I accept rent after a breach and still forfeit the lease?

No. If you accept rent after knowing about the breach, you may waive your right to forfeiture. This is why it is crucial to get legal advice before taking any action after a breach occurs.

What if the tenant refuses to vacate after forfeiture?

If peaceable re-entry is not possible or the tenant refuses to vacate, you must obtain a court order for possession. Do not attempt to forcibly remove the tenant without legal authorisation.

Can I claim damages in addition to forfeiture?

Yes, in certain cases. If the tenant has caused damage or financial loss through their breach, you may be able to claim compensation or damages through the courts alongside or after forfeiture.

Is forfeiture the same as eviction?

No. Forfeiture refers specifically to terminating a commercial lease due to breach, while eviction is a broader term that may include residential or court-ordered possession for various reasons.

Where can I get help with forfeiting a commercial lease?

Visit our dedicated page on commercial tenant eviction for professional advice and landlord support. We provide legal guidance tailored to your circumstances.

The British Landlords Association is a national landlords association for UK landlords. It is one of the largest landlord associations in the UK. Join us now for £79.95!

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