Evicting a commercial tenant in the UK for non-payment of rent is a powerful tool which is, depending on the specific circumstances of the case, potentially available to a landlord when the tenant has failed to pay rent.
For both landlords and tenants in the UK, understanding the legal framework governing forfeiture of the lease is crucial. This article explores the complexities involved in evicting a commercial tenant, the importance of specific lease terms, and the circumstances where it is possible to evict a commercial tenant.
1. The Right of Forfeiture
Forfeiture allows a landlord to terminate a lease and re-enter the property due to a tenant’s breach. For non-payment of rent, this is generally the fastest route to eviction for a landlord of a commercial property.
In the first instance it is worth checking whether the lease contains an express forfeiture clause.
The Forfeiture Clause
- Express Provision: The lease must contain an express ” forfeiture clause / proviso for re-entry.” Without this clause, it is difficult to forfeit the lease for rent arrears unless the breach is so severe it is considered “repudiatory.”
- Grace Periods: Most leases specify a period (typically 14 or 21 days) that rent must remain unpaid before the right to forfeit arises.
Exemption from Section 146
- Unlike other breaches (such as unauthorised alterations / repairs / breach of user clauses ), non-payment of rent does not require a Section 146 Notice under the Law of Property Act 1925.
- The landlord can, in certain circumstances which are discussed below, move straight to forfeiting the lease once the grace period expires.
2. Methods of Recovery of possession
There are two distinct ways to exercise the right to forfeit a commercial lease: Peaceable Re-entry and Court Proceedings.
Peaceable Re-entry (Self-Help)
- Action: The landlord (usually via a certificated bailiff) physically enters the premises and changes the locks.
- Timing: This commonly occurs in early hours of morning when the premises are unoccupied to avoid issues around breaching the Criminal Law Act 1977, which prohibits the use or threat of violence to secure entry.
- Effect: The lease is terminated the moment the locks are changed.
Possession Proceedings (The Court Route)
- Process: The landlord issues a claim for possession in the County Court or High Court.
- Requirement: This is often the preferred route if there is any risk of physical confrontation or if the property is mixed-use (containing a residential element).
- Termination: The lease is treated as being formally terminated when the court serves the possession claim on the tenant.
3. The Doctrine of Waiver
A significant risk to a landlord where a tenant has failed to pay rent is “waiving” the right to forfeit. This occurs if the landlord, with knowledge of the breach, performs an act that acknowledges the continued existence of the lease after the right to forfeit has arisen. Examples of waiver could include:
- Rent Demands: Sending an invoice for future rent is a waiver.
- Acceptance of Rent: Accepting even a partial payment of arrears or future rent is a waiver.
- Communication: Any act by the landlord or their agent (e.g., discussing repairs or granting consent) that treats the lease as ongoing could render any forfeiture unlawful
- Lapse: Once a waiver occurs, the landlord must wait until the next rent period is missed before they can attempt to forfeit again.
4. Relief from Forfeiture
Even after a landlord has successfully re-entered or issued proceedings, the tenant has a statutory right to apply for “Relief from Forfeiture.”
Court Discretion
- Payment of Arrears: If the tenant pays all outstanding rent, interest, and the landlord’s legal costs, the court will almost always grant relief.
- Status Quo: Relief restores the lease as if the forfeiture never happened.
- Time Limits: For peaceable re-entry, the tenant typically has six months to apply for relief (although in some cases tenants have been able to obtain relief from forfeiture after more than 6 months has expired.
- For Court Proceedings: If the landlord succeeds in court, the tenant should usually apply for relief before the possession order is executed. Once the landlord takes possession under a court warrant, the tenant’s right to seek relief is significantly curtailed.
5. Procedural Scrutiny
To ensure the forfeiture of the commercial lease / eviction is lawful, the following technicalities must be observed:
Note: Forfeiture is an “all or nothing” remedy. By terminating the lease, you lose the right to future rent and may become liable for business rates while the unit is vacant.
Technical Considerations and Mixed-Use Property
The Definition of “Rent”
Landlords must ensure that the debt they are forfeiting for is legally classified as “rent.” While basic rent is obvious, other charges like service charges, insurance premiums, and utilities must be “reserved as rent” in the lease. If they are not, the landlord must serve a Section 146 Notice before forfeiting for those specific debts.
Mixed-Use Danger
The Protection from Eviction Act 1977 applies if any part of the premises is “occupied as a dwelling.” If a commercial tenant lives in a flat above their shop under the same lease, a landlord cannot use peaceable re-entry. Doing so is a criminal offence. In these cases, a court order is the only legal pathway.
Chattels and Abandoned Goods
When a landlord forfeits, the tenant’s stock and equipment remain inside. The landlord becomes an “involuntary bailee.” They must follow the Torts (Interference with Goods) Act 1977, giving the tenant a reasonable opportunity to collect their goods before they can be sold or disposed of. Failure to do so can lead to a secondary legal claim for conversion of goods.
Summary Checklist for Landlords
To ensure a legally compliant eviction for rent arrears, a landlord must:
- Verify the Lease: Confirm the existence of a forfeiture clause and calculate the exact expiry of the grace period.
- Audit the Accounts: Ensure the arrears are strictly defined as rent and that no payments have been accepted after the right to forfeit arose.
- Check Occupancy: Confirm the premises are purely commercial and that no one is living on-site.
- Check waiver: Confirm that there have not been any steps taken that could amount to a waiver of the right to forfeit the lease.
- Issue Instructions: Engage certificated bailiffs for peaceable re-entry or legal counsel for court proceedings.
- Secure the Site: Change locks, take meter readings, and photograph the inventory of goods left behind.
Forfeiture is a powerful but clinical tool. Because the courts view it as a “draconian” remedy, it is important to ensure that the forfeiture is lawful . Any deviation can result in the landlord paying the tenant damages, rather than the other way around.
David Burns, Senior Litigation Partner at Ronald Fletcher Baker LLP, has extensive experience handling issues related to commercial lease disputes and non payment of rent. Whether you are seeking to enforce the terms of a lease or obtain advice about issues around complying with the terms of a lease we have the experience to assist. For enquiries on this topic, please contact David Burns via email at D.Burns@rfblegal.co.uk or by phone at 0207 467 5751.
David Burns
Partner senior per il contenzioso
