The end of peaceful re-entry?

The right of forfeiture is a remedy currently available to a landlord when their tenant fails to pay rent or breaches a covenant in the lease.  The landlord can either take formal court proceedings for breach of covenant or by take some other unequivocal action to end the lease early.

In the case of rent being outstanding the landlord can exercise their right of peaceable re entry.  This right is often exercised by a commercial landlord where the tenant has failed to pay rent and will usually involve the landlord re entering the premises and changing the locks.  Once this happens the lease will then immediately come to an end.  This is a quick and cost effective solution for the landlord however, this may be about to change in the future. 

The Law Commission who is a statutory independent body created to review and recommend reforms to the law so that it is fair, modern, simple and effective, has proposed that the current regime be dispensed with.  This would bring an end to the current right of the landlord to peaceable re entry.

The Law Commission has proposed that there be two statutory reforms to replace forfeiture.  The first proposal is for the landlord to have a court based termination claim called the Standard Procedure and a second procedure called the Summary Procedure which would replace the current right of peaceable re-entry.

The new statutory scheme would apply to all tenancies whether or not they came into effect before or after the new scheme comes in to force and these new procedures would apply even when the lease does not contain a right of forfeiture for the landlord.  The landlord would also need to decide which procedure to use and the tenancy would continue to be legally in place until the court makes an order to terminate it.

To use the Standard Procedure the landlord would need to serve a notice within 6 months of the default of the tenant and not less than 7 days before bringing a termination claim.  This notice would need to be served on the tenant and any holders of derivative interests specifying what needs to be done to remedy the default as well as specifying the breach and when this occurred. If the breach is not remedied or an agreement between the landlord and the tenant is not reached then the landlord can then take action at court. If the court is satisfied that the tenant’s default has occurred then it has discretion to make a range of orders including a termination order to determine the lease.  The court can also order the tenant to remedy the breach but also take into account a number of specific considerations under the new regime.

The summary procedure will allow the landlord to bring the tenancy to an end without applying to court.  The landlord must serve a summary termination notice on the tenant as well as any others with a derivative interest. This notice will end the tenancy once month from the date of service unless the notice is discharged by an application to court by the tenant or an owner of a derivative interest.  If an application to discharge is not made by the tenant within one month of service of the notice then the landlord can then re–enter the premises and change the locks. If however an application is made to discharge the notice the tenancy will only end when the court refuses to discharge the notice and orders possession of the premises to the landlord.

The government will reach a conclusion on whether to implement these changes this year.   The decision to abolish the right of re-entry may not be very popular with commercial and residential landlords.  Watch this space for further news.