How to Deal with a Tenant Breaching a Lease Agreement

When a tenant breaches a commercial lease agreement in the UK, landlords must address the situation carefully to ensure compliance with the law while protecting their interests.

Here, we outline the key steps landlords can take, enforcement actions available, and remedies under UK law.

Identify and Document the Breach

Before taking action, it is essential to identify the type of breach. Common examples include:

• Non-payment of rent: Failure to pay rent by the due date.
• Illegal use of the premises: Operating a business is not permitted under the lease.
• Failure to maintain the property: Breaches of repair and maintenance obligations.
• Unauthorised subletting: Letting the premises to a third party without consent.

Action Tip: Document the breach with evidence such as written communication, photographs, or inspection reports.

Review the Lease Agreement

Examine the lease agreement to determine:

• The specific obligations of the tenant.
• Any notice requirements before enforcement.
• Applicable penalties or remedies for breaches.

Leases often outline landlord rights in the event of a breach, such as forfeiture or legal action.

Communicate with the Tenant

Engage with the tenant to address the issue informally, if possible. Send a written notice detailing:

• The nature of the breach.
• The timeframe for rectification.
• Potential consequences if the breach is not remedied.

Action Tip: Keep a record of all communications for legal purposes.

Enforcement Actions Available

If the breach is not resolved, landlords may consider the following enforcement actions:

Forfeiture of Lease

1. Forfeiture allows landlords to terminate the lease due to a tenant’s breach. Steps include:
   • Peaceable Re-entry: Physically re-enter the property and take possession (allowed for certain breaches, excluding non-payment of rent during a moratorium).
   • Court Proceedings: Apply to the court for an order to forfeit the lease.
2. Important: Forfeiture must follow strict legal procedures, and tenants can apply for relief from forfeiture.
3. Commercial Rent Arrears Recovery (CRAR)
4. For rent arrears, landlords can use CRAR to seize and sell tenant assets to recover unpaid rent. CRAR applies only to principal rent, not service charges or other amounts.
5. Pursuing a Debt Claim
6. File a claim in court to recover unpaid rent or other financial losses resulting from the breach.
7. Injunctions and Specific Performance
   • Injunctions: To prevent ongoing breaches, such as unauthorised alterations.
   • Specific Performance: Compel the tenant to comply with their obligations, such as repairing damages.
8. Recovery of Possession via a Section 25 Notice
9. If the breach occurs near the end of the lease term, landlords can issue a Section 25 notice to prevent renewal under the Landlord and Tenant Act 1954.

Available Remedies

In addition to enforcement, landlords may pursue the following remedies:

• Damages for Breach of Contract: Claim compensation for financial losses due to the breach.
• Dilapidations Claim: Recover costs for repairing the property at the end of the lease if the tenant fails to maintain it.
• Interest and Late Payment Penalties: Charge interest on unpaid rent as specified in the lease agreement or under the Late Payment of Commercial Debts Act.

Seek Professional Advice

Given the complexity of UK property law, landlords should consult:

• Solicitors: For legal advice on enforcement actions and litigation.
• Surveyors: For issues related to property damage or dilapidations.

Action Tip: Engaging legal professionals ensures compliance with procedural requirements and minimises risks.

FAQ’s on Tenant Breach of Commercial Lease 

Can I evict a tenant immediately for breach of lease?

No, immediate eviction is rarely permitted. You must follow the forfeiture or possession process outlined in the lease and adhere to legal notice requirements.

What happens if the tenant applies for relief from forfeiture?

Courts may reinstate the lease if the tenant remedies the breach and compensates the landlord within a reasonable time.

How do I enforce a judgment for unpaid rent?

Options include obtaining a warrant for enforcement by bailiffs or a charging order on tenant assets.

By carefully following these steps, landlords can effectively handle tenant breaches of commercial lease agreements while ensuring their actions comply with UK law.