Termination of Tenancies for Tenant Default - Law Commission

3.88 We recommend that the Insolvency Act 1986 should be amended so as to
ensure that:
(1) those protections from forfeiture currently afforded to tenants
should apply with equal force to termination action under the
statutory scheme; 66 and
(2) a landlord must obtain leave of the court before serving a summary
termination notice in respect of premises let to a debtor where
bankruptcy proceedings are pending. 67
RESIDENTIAL TENANCIES: EXISTING STATUTORY PROTECTIONS
3.89 Since the publication of the CP, sections 166 to 170 of the Commonhold and
Leasehold Reform Act 2002 (“the 2002 Act”) have come into force. These contain
provisions that apply generally to any “long lease of a dwelling” 68 and, together
with section 81 of the Housing Act 1996 (“the 1996 Act”) as amended by section
170 of the 2002 Act, restrict the freedom of a landlord to forfeit a residential
tenancy.
3.90 Section 166 of the 2002 Act requires a landlord to give a tenant a notice in
prescribed form 69 when making any demand for payment of rent under a long
lease. Unless and until that notice is given, the tenant is not liable to pay. The
landlord must specify a date for payment, which must be between 30 and 60
days after the date on which the notice is given.
3.91 By section 167, a landlord may not exercise a right of re-entry or forfeiture for
failure by a tenant to pay an amount consisting of rent, service charges or
administration charges (or any combination of them) unless the sum unpaid
exceeds “the prescribed sum” or consists of or includes an amount which has
been payable for more than “a prescribed period”. 70 Default charges (payable in
respect of the tenant’s failure to pay the sum unpaid) are discounted in
calculating the sum unpaid.
3.92 Section 168 provides that a landlord may not serve a notice under section 146 of
the Law of Property Act 1925 in respect of any breach by a tenant of a covenant
or condition unless the tenant has admitted the breach or the court or a tribunal
has finally determined that the breach has occurred. There is a special procedure
envisaged whereby a landlord can ask a Leasehold Valuation Tribunal to
adjudicate on the question whether a breach has occurred.
66 Draft Bill, sch 5.
67 Draft Bill, sch 5, paras 5 and 6.
68
“Long lease” being defined at length in the 2002 Act, ss 76 and 77.
69
Specifying the amount of payment, the date of payment and such other information as is
prescribed: see SI 2004/3096.
70
The sum and the period, respectively £350 and three years, were prescribed by SI
2004/3086.
47