Termination of Tenancies for Tenant Default - Law Commission

emphasise what the Commission was hoping to achieve with this new statutory
right of re-entry:
The purpose of the new right is to provide landlords of commercial
premises with a management tool to protect both the value of their
investment and their income stream where the tenant has defaulted
on the covenants or conditions contained in the lease. It will be of
particular value where there is no realistic prospect of the tenant or
the owner of any derivative interest obtaining relief from the court.
However, the right would not operate in a way that would unfairly
deprive tenants and the owners of derivative interests of a reasonable
opportunity to apply for relief. 28
7.25 After consultation, Commissioners agreed to depart from the recommendations
contained in the First Report to which the 1994 Bill sought to give effect. A press
release, published in June 1999, stated that the Law Commission now intended
to recommend:
(1) the retention of a landlord’s right to terminate a tenancy by physical reentry;
but
(2) that the existing right of re-entry should be replaced with a new statutory
right which would be subject to rational procedural and notice
requirements and appropriate safeguards.
7.26 The key difference between the current law and the proposed new statutory right
of re-entry was that exercise of the statutory right would not bring the tenancy to
an end immediately. Instead, the landlord’s action would initiate a process
whereby the tenancy would terminate automatically after a fixed period of time.
This period of time was intended to give the tenant and certain derivative interest
holders the opportunity to apply to the court for relief. The tenancy would
continue during the period between re-entry and termination. The tenant would
therefore remain liable for rent and would be expected to observe the covenants
in the tenancy, at least those which they were able to observe while out of
occupation. No provision was made for the tenant or any derivative interest
holder to make any application for relief after the tenancy had terminated.
7.27 The modified recommendation included a requirement that a minimum of seven
days’ notice of the landlord’s intention to physically re-enter should be given in all
cases. There would be restrictions on the right to exercise physical re-entry at all
in relation to residential premises, tenancies with an unexpired term of 25 years
or more, and circumstances where the breach of covenant complained of related
to disputed service charges. It was made clear that the statutory right would only
be exercisable in circumstances where the landlord would be entitled to bring a
claim under the court-based procedure.
28 Landlord and Tenant Law: Termination of Tenancies by Physical Re-entry (January 1998)
Law Commission Consultative Document, para 3.16.
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