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22 April 2020

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.

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