Learning Outcomes
After reading this article, you will be able to identify the core legal remedies available to landlords and tenants for breach of leasehold covenants. You will be able to explain the requirements for debt actions, forfeiture, injunctions, specific performance, set-off, and relief from forfeiture, and apply these principles in response to realistic SQE2 scenarios. You will also understand how privity and waiver affect enforcement and remedy options for both old and new leases.
SQE2 Syllabus
For SQE2, you are required to understand remedies for breach of leasehold covenants from both the landlord’s and tenant’s viewpoints. Focus your revision on:
- The full range of remedies for breach of leasehold covenants, including debt action, forfeiture, injunction, specific performance, set-off, damages, and CRAR.
- The legal and procedural requirements for exercising each remedy.
- The operation of privity of contract and estate in determining liability and entitlement.
- The effect and requirements of waiver and relief from forfeiture.
- The impact of statutory conditions, such as service of notices (including s. 146 LPA 1925) and time limits.
- How remedies and liability differ between old (pre-1996) and new (post-1996) leases.
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- Which key legal limitation applies to a landlord’s action to recover rent arrears from a defaulting tenant?
- When is a landlord prohibited from exercising forfeiture after accepting rent following a breach?
- What must a tenant typically do before using set-off as a remedy for a landlord’s failure to repair?
- Can a subtenant obtain relief from forfeiture if the head lease is forfeit—if so, on what conditions?
Introduction
This article outlines the primary remedies available when a party breaches a leasehold covenant. Whether acting for a landlord or tenant, you will need to identify—and critically, justify—the correct remedy in a given scenario, and apply the relevant legal rules, time limits, notice requirements, and practical considerations. SQE2 problems often focus on proper procedural use and assessment of debt actions, forfeiture and relief, injunctions, set-off, and statutory controls.
Remedies for Breach of Leasehold Covenant
Debt Action
Unpaid rent, or other liquidated (fixed sum) obligations, are usually recoverable by a straightforward debt action.
Key Term: Debt action
A claim for an unpaid, ascertainable sum (such as rent due) under the lease, brought by landlord or tenant against the defaulting party.
The landlord may recover rent or service charges from the current tenant. Former tenants may remain liable by privity of contract (for old leases) or an Authorised Guarantee Agreement (AGA). The statutory time limit is 6 years from the date the sum was due.
Forfeiture
Forfeiture (or “right of re-entry”) allows the landlord to terminate the lease early for serious breach, usually expressly provided for in the lease.
Key Term: Forfeiture
The landlord’s contractual or statutory power to end the lease and recover possession following a tenant default, subject to strict legal and procedural requirements.
Forfeiture of rent often requires rent to be unpaid for a specified time (e.g., 14 or 21 days). For other breaches, service of a notice under s. 146 Law of Property Act 1925 is usually mandatory, giving the tenant the chance to remedy (if possible) and pay compensation.
Key Term: Waiver
Loss of the right to forfeit for a specific breach arising where a landlord, with knowledge of the breach, accepts rent or otherwise affirms the tenancy for the relevant period.
If the landlord knowingly accepts rent due for a period after the breach, or otherwise acts so as to recognise the lease’s continuance, forfeiture is barred for that breach. Forfeit may still be possible for new subsequent breaches.
Worked Example 1.1
A commercial tenant is two months in arrears. The lease permits forfeiture if rent is more than 21 days overdue. The landlord is aware of the arrears but accepts a further month’s rent.
Question: Can the landlord still forfeit for the original non-payment?
Answer:
No. By accepting rent for a period after knowing of the breach, the landlord has waived the right to forfeit for that episode of breach.
Relief from Forfeiture
A tenant (and, in some cases, a subtenant) can generally apply to the court for relief from forfeiture, asking to be reinstated in occupation. For non-payment of rent, relief is routinely granted if all arrears, costs, and interest are paid before judgment or re-entry unless the lease has been already surrendered or the property re-let.
Key Term: Relief from forfeiture
The discretionary statutory power for a court to restore the lease after forfeiture, typically on payment of arrears and any costs or rectification of the breach.
For other breaches, the tenant may have to prove that the breach has been remedied or offer appropriate compensation. Relief is less likely where the breach is not capable of remedy (e.g., illegal subletting).
Damages
Both parties can sue for damages for breach of covenant. For repair covenants, a landlord’s claim is capped at the diminution in the reversion’s value due to the breach. For repair obligations, if the lease is for seven years or more, the landlord must serve a s. 146 notice prior to claiming damages, and the tenant may serve a counter-notice, requiring court permission before further proceedings.
Injunction
A court may grant an injunction prohibiting ongoing or threatened breaches, such as unauthorised subletting or landlord interference with quiet enjoyment.
Key Term: Injunction
A discretionary court order requiring a party to stop breaching (or continue complying with) a leasehold covenant.
Specific Performance
Generally, specific performance is rarely granted for positive covenants in leases (especially for landlords seeking to compel repair); damages are the usual remedy. However, tenants may occasionally obtain an order compelling a landlord to perform a positive repairing obligation, especially where the defect is serious and damages are inadequate.
Key Term: Specific performance
A court order requiring a party to perform a contractual obligation where damages would be insufficient remedy.
Commercial Rent Arrears Recovery (CRAR)
CRAR permits landlords of commercial premises to seize certain goods belonging to a tenant for unpaid principal rent (not service charges or insurance), subject to statutory notice procedures. CRAR does not apply to residential premises.
Set-off / Self-help
Where landlords refuse or neglect to repair, a tenant may, after proper notice and opportunity for remedy, carry out the work themselves and deduct the cost from future rent—so-called set-off. The lease may exclude this remedy, and statutory limits can apply.
Key Term: Set-off
The right, in limited circumstances, for a tenant to deduct the cost of essential repairs or remedies from future rent, provided correct procedures are followed.
Worked Example 1.2
A tenant repeatedly asks the landlord to replace a dangerously leaking boiler. The landlord does nothing. The tenant repairs the boiler at personal expense and deducts the cost from future rent.
Question: On what conditions is this “set-off” approach lawful?
Answer:
The tenant must give proper notice and opportunity to repair; set-off must not be prohibited by the lease; and only reasonable, evidenced costs may be deducted.
Exam Warning
For SQE2, the examiner may probe whether set-off is permitted by the lease, and whether correct notice and reasonableness have been satisfied. If set-off is unavailable, unauthorised withholding of rent can itself be a breach, risking forfeiture.
Remedies Available to the Tenant
Tenants have several potential remedies where a landlord breaches a lease covenant: damages; injunction (especially for repeated or continuing breach or interference with quiet enjoyment); set-off/self-help if properly available and used; specific performance in limited cases for landlord’s repair obligation; and, as a last resort, repudiation for fundamental breach (rare in practice).
Key Point Checklist
This article has covered the following key knowledge points:
- Remedies for breach of leasehold covenant include debt action, forfeiture, injunctive relief, specific performance, set-off and damages.
- Forfeiture for non-payment of rent typically requires no notice, but acceptance of rent after breach amounts to waiver.
- For other breaches, a valid s. 146 notice must precede forfeiture and often damages claims (especially for repair).
- The right to forfeiture can be lost by waiver and is subject to relief.
- CRAR is a commercial landlord’s summary remedy for rent but has limitations and notice requirements.
- Set-off or self-help for tenants requires proper notice, opportunity to repair, and compliance with lease/statute.
- Both landlords and tenants may seek damages, but statutory caps and procedures often apply to repair claims.
- The identity of persons liable and entitled to sue depends on privity of contract and estate, and, for post-1996 leases, on AGAs and statutory release provisions.
Key Terms and Concepts
- Debt action
- Forfeiture
- Waiver
- Relief from forfeiture
- Injunction
- Specific performance
- Set-off