Termination of Tenancies for Tenant Default - Law Commission

3.5 The CP went on to explain our aim of ensuring that landlords should not be able
to avoid the scheme through the inventive drafting of tenancy agreements. 4 One
device we identified that might be used to circumvent a new scheme was the
grant of a tenancy subject to a condition that the tenant does (or does not do)
something. Another such device was an express limitation to the effect that a
tenancy continues only until the tenant acts or fails to act in a particular way. It
was intended that the scheme should apply where such conditions or limitations
were engaged.
3.6 However, the scheme was not intended to apply to “neutral” conditions or
limitations, which may occur or become effective without any act or omission on
the part of the tenant. For example, a tenancy might be made determinable on
the grant of planning permission for the land demised under the tenancy. The
landlord should in such circumstances be entitled to determine the tenancy
without invoking the statutory termination scheme.
3.7 The CP provisionally proposed that tenant default should include all events on
the happening of which the tenancy is to cease or the landlord is to have the right
to apply for a termination order, to forfeit the tenancy or to bring it to an end in
any other way. 5
Consultation
3.8 The majority of responses to this proposal supported its underlying objective. For
example, the Society of Legal Scholars considered the proposed treatment of
conditions and limitations “essential to prevent landlords making a mockery of the
termination order scheme”.
3.9 The Judges of the Chancery Division agreed that “disguised” breaches of the
type identified should constitute tenant default. However, along with the National
Trust, they expressed concern that as worded the proposal could include a break
clause, which allows the party with the benefit of the provision to terminate a fixed
term tenancy prematurely by serving notice.
Reform recommendations
3.10 “Tenant default” is defined in the draft Bill as a breach by the tenant (or a person
who has agreed to guarantee the tenant’s obligations under the tenancy) of a
covenant of the tenancy, other than an “excepted covenant”. 6 “Covenant” is
broadly defined so as to include any condition, agreement or term, including
implied covenants or covenants imposed by common law or statute. 7
3.11 We believe that this approach meets the objective of the CP’s provisional
proposals, which was to ensure that the breach of any obligation owed by a
tenant to his or her landlord would (unless expressly excluded) be actionable
under the scheme. It should not be possible to circumvent the operation of the
4 CP, para 4.9 and following.
5 CP, para 12.4(4).
6 Draft Bill, cl 2(1). “Excepted covenants” are considered at para 3.28 and following.
7 Draft Bill, cl 1(4).
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