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What is forfeiture, and what recourse do leaseholders have?

A lease is a contract and therefore if a leaseholder breaches the terms of their lease, the landlord could take legal action against them. Forfeiture of the lease is the ultimate sanction a landlord could pursue in such situation. In order to gain possession of the property by forfeiting the lease it is necessary to obtain a court order. The process is commenced, generally, by the service of a valid notice under section 146 of the Law of Property Act 1925, the Notice of Seeking Possession.

A valid section 146 notice cannot be served unless the leaseholder has agreed the arrears or that the breach has occurred; or the breach or amounts due has been finally determined by the First-tier Tribunal (Property Chamber) or a court or under a post-dispute arbitration agreement. A determination becomes final at the end of any period provided for appeal and the landlord may not serve the section 146 notice until 14 days after that date.

If the breach relates to arrears, you cannot serve a valid section 146 notice where the amount of service charges, administration charges or ground rent owed (or a combination of all of these) total less than £350, or have been outstanding for less than three years. It is not necessary to serve a section 146 notice if the breach is for ground rent arrears.

A leaseholder can apply to court to seek relief from forfeiture. This means having the forfeiture set aside and the lease restored. The court has a wide discretion to grant or refuse relief, which is more likely to be exercised in favour of the leaseholder if they react swiftly, pay any arrears, remedy any breaches of covenant and pay the landlord’s costs.

You may require the services of a solicitor. See the directory of leasehold practitioners.

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