Q&A: A closer look at rent demands
Question
Where the lease is a commercial lease which includes a residential flat above does the landlord have to serve a formal rent demand (akin to in a purely residential lease) or can they just serve their normal rent demand before applying to court for possession or forfeiture for non-payment of rent?
Answer
In many cases, a landlord of a commercial lease which includes a residential flat would only need to serve their normal rent demand before applying to court for possession or forfeiture for non-payment of rent.
In order for a landlord to have the right to forfeit on the basis of non-payment of rent, this right must either be provided for as a express term of the lease; or in the absence of an express provision in the lease, the right has arisen due to a breach by the tenant of an express or implied condition of the lease. For more information on the landlord’s right to forfeit, see Practice Note: Forfeiture of a lease.
The landlord should check the terms of the lease to see whether the obligation to pay rent is dependent on the provision of a formal rent demand and ensure that this is complied with. In many commercial leases, the right to forfeit arises if rent is unpaid (whether demanded or not).
There are further requirements in respect of long residential leases pursuant to section 166 of the Commonhold and Leasehold Reform Act 2002 (CLRA 2002). A tenant under a long lease of a dwelling is not liable to make payment of rent under the lease unless the landlord has provided the tenant with a notice in the prescribed form. However, by CLRA 2002, s 166(8)(a), a tenancy to which Part II of the Landlord and Tenant Act 1954 (LTA 1954) applies cannot be a ‘long lease of a dwelling’.
The landlord should therefore check whether LTA 1954 applies. It will be necessary for the premises to be occupied for the purposes of business pursuant to LTA 1954, s 23(1). For further guidance, see Practice Note: LTA 1954 business lease renewal—termination, in particular section: Does LTA 1954 apply?
References: Cheryl Investments Ltd v Saldanha [1979] 1 All ER 5
In cases where the business purpose is significant, rather than merely incidental to the residential purpose, the presence of the flat will not be enough to displace LTA 1954 and therefore the requirement to serve a formal CLRA 2002, s 166 notice would not apply (see Cheryl Investments Ltd v Saldanha).
References: Pirabakaran v Patel [2006] EWCA Civ 685
Notwithstanding the primarily commercial nature of this arrangement, a landlord would need to forfeit by way of court proceedings rather than peaceable re-entry. This is because of the statutory restrictions in respect of effecting the forfeiture of residential premises. Under section 6 of the Criminal Law Act 1977, it is a criminal offence to threaten or use force to gain entry when someone is physically at the premises and opposes re-entry. Further, under section 2 of the Protection from Eviction Act 1977 (PEA 1977), it is unlawful to peaceably re-enter a dwelling while someone is lawfully residing at the premises. The case of Pirabakaran v Patel confirmed that tenants of mixed use premises fall within the scope of PEA 1977, s 2. For more information regarding the tenant’s right to protection from eviction, see Practice Note: Protection from eviction and protection from harassment.
For more information generally, see Practice Note: Statutory limitations on the landlord’s right to forfeit a long residential lease.
This article was written by Samuel Lear at Charles Russell Speechlys and was first published on the Lexis Nexis Ask Forum. For more information, please contact Sam on +44 (0)1242 246374 or at samuel.lear@crsblaw.com.
Our thinking
IBA Annual Conference
The IBA heads to Miami for its 2022 Annual Conference bringing together thousands hundreds of lawyers from around the world.
Martin Wright
Joint Venture Opportunities
Join our panel where we will discuss various topics including Joint Venture structuring and Partner procurement.
Julia Cox
Mind your business: Safeguarding your business against loss of mental capacity
Practical considerations to safeguard your business against loss of mental capacity.
Stephen Burns
PART 36— A move towards greater flexibility?
Discussing the possibility of the Part 36 regime opening up with recent developments.
Sarah Anticoni
FT Wealth quotes Sarah Anticoni on forum shopping
"Being the first to file for divorce is not a foolproof way of securing an English hearing"
Louise Ward
What can UK investors interested in Life Sciences learn from their more experienced, including US, counterparts?
The recent tie-up between Canary Wharf and Kadans demonstrates the enthusiasm to access the lucrative UK life sciences market.
Hanh Nguyen
The hurdles in establishing retrospective validation of post-petition dispositions
A discussion on the key takeaways from ICC Judge Barbers recent case ruling.
Helen Coward
Helen Coward writes for Tax Journal on the main purpose test for SDLT group relief
Mainly ignored? The main purpose test for SDLT group relief
Patricia Nathan-Amissah
The Ayes have it - Collateral Warranties can be a ‘Construction Contract’
The Court of Appeal handed down its judgment in the case of Abbey Healthcare (Mill Hill) Limited v Simply Construct (UK) LLP
Rebecca Davies
Islamic Finance News reports on the appointment of Rebecca Davies to Legal Director in our Middle East team
Islamic Finance News reports on the appointment of Rebecca Davies to Legal Director in our Middle East team
Jonathan Morley
Charles Russell Speechlys advising Battery Ventures on the sale of SPT Labtech for £650 million.
Battery Ventures has raised over $9 billion to invest in software and services, enterprise infrastructure, and much more around the world.
Sarah Farrelly
Windrush Day 2022 – supporting access to justice
Charles Russell Speechlys is proud to continue supporting survivors of the Windrush scandal in their fight for justice.
Laura Bushaway
The Leasehold Reform (Ground Rent) Act 2022: Landlords and developers beware serious sanctions for non-compliance
The Leasehold Reform (Ground Rent) Act 2022 received Royal Assent on 8 February 2022 and will come into force on 30 June 2022.
Emma Preece
EG quotes Emma Preece on the Picturehouse and BNY Mellon rent arrears cases
“The case is being closely watched by landlords and tenants alike as the impact of the pandemic lives on in the commercial property sector”
David Coates
Charles Russell Speechlys has advised long-standing client Stonegate on a series A investment into Peckwater Brands
Stonegate is one of the largest pub companies in the UK with a rich portfolio that covers over 4,500 sites.
Sarah Farrelly
Pro bono support for major office premises move for charity in Stoke-on-Trent
Emmaus entities provide safe homes, community support and meaningful work to formerly homeless people across the UK.