Termination of Tenancies for Tenant Default - Law Commission

PART 3
TENANT DEFAULT
INTRODUCTION
3.1 This Report recommends the replacement of the current law of forfeiture with a
statutory scheme whereby landlords may terminate tenancies for tenant default.
Termination action may be taken either by making a termination claim through
the courts or by using a summary termination procedure (which may result in
termination of the tenancy without any reference to the courts). Whichever of
these routes is taken, the single ground on which the landlord relies is that there
is tenant default.
3.2 It is important to emphasise the centrality of the concept of tenant default. It is the
gateway for our recommended statutory scheme. The landlord must be ready to
establish its existence whenever termination action is taken, whether by making a
termination claim (following service of a tenant default notice: see further Parts 4
and 5) or by using the summary termination procedure (following service of a
summary termination notice: see further Part 7).
3.3 In this Part, we explain the role of tenant default in the statutory scheme. We
describe what tenant default comprises and how it applies in relation to both postcommencement
and pre-commencement tenancies. We then consider the
application of this new concept to particular aspects of the landlord and tenant
relationship, in particular the payment of rent, the assignment of the term, liability
to repair and the consequences of tenant insolvency. We explain how we deal
with the existing statutory protections (contained in section 81 of the Housing Act
1996 and Chapter 5 of the Commonhold and Leasehold Reform Act 2002)
applicable in the residential sector. Finally, we consider how the new statutory
scheme dispenses with the need for certain doctrines of the current law, notably
waiver, and whether breaches of covenant have been, or are capable of being,
remedied.
WHAT COMPRISES TENANT DEFAULT
The CP’s provisional proposals
3.4 The CP provisionally proposed that all breaches of covenant by the tenant should
comprise tenant default, save and in so far as the tenancy expressly stipulates
that a particular breach does not do so. 1 We made clear that the definition of
“covenant” was intended to be wide enough to include all obligations owed by the
tenant to the landlord, whether expressly undertaken or implied at common law or
by statute. 2 Unlike the current law, no distinction was to be drawn between nonpayment
of rent and other breaches. 3
1 CP, para 12.4(2).
2 CP, para 4.5.
3
The different treatment of breaches was identified as a defect in the current law in the First
Report, para 3.11 and following.
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