The Commonhold and Leasehold Reform Act 2002 restricts landlords’ rights to forfeit long leases of dwellings. As a result, demands for ground rent must be made in a “prescribed form” (section 166) and the tenant need not pay unless ground rent is properly demanded. Section 166 notices must state the amount being demanded and the date on which it must be paid and, if different, the date on which payment is due under the lease. Importantly, the date on which payment is to be made cannot be before the date specified in the lease, or less than 30 days from the date on which the notice is given, or more than 60 days thereafter.
The prescribed form of section 166 notice was amended in 2011. The explanatory notes, addressed to tenants, contained double negatives that were thought to be unclear – and were changed to make it clearer that, as a result of section 167, a landlord cannot forfeit a lease unless the arrears exceed £350 or include an amount that has been outstanding for more than three years.
Cheerupmate2 Ltd v De Luca Calce [2017] UKUT 377 (TCC); [2017] PLSCS 183 concerned the forfeiture of a lease following the service of a section 166 notice in respect of ground rent totalling £11. Unfortunately, the notice incorporated the “old” prescribed wording, instead of the amended wording. Did that render the notice invalid? The judge decided that it did. Parliament had specifically decided that the “old” wording should not be used because it was difficult to understand.
The forfeiture clause in the lease applied where ground rent had been in arrears for two years or more. Did the two year period run from the date on which rent fell due in accordance with the lease, or from the date named in the section 166 notice as the date on which the landlord required payment? And does the statutory requirement for more than three years of arrears apply with effect from the date on which sums fall due under a tenant’s lease, or from the date named in its section 166 notice as the date on which the landlord requires payment?
The authorities on section 48 of the Landlord and Tenant Act 1987 (landlords’ addresses must be notified to tenants) confirm that rent is not payable until a landlord complies with its provisions. But, once a section 48 notice has been given, rent is due and any periods of arrears are calculated in accordance with the dates in a tenant’s lease: Rogan v Woodfield Building Services Ltd [1995] 1 EGLR 72.
However, the judge noted that the statutory provisions are very different and that the 2002 Act was enacted to protect tenants against forfeiture. Furthermore, section 166(4) states that: “if the date on which the tenant is liable to make the payment is after that on which he would have been liable to make it in accordance with the lease, any provisions of the lease relating to non-payment or late payment of rent have effect accordingly”. In the judge’s view, this meant that the lease could not be forfeited for arrears of ground rent until two years after the date for payment set by the section 166 notice. Similarly, a landlord cannot forfeit for arrears of up to £350 until three years after the date named in its section 166 notice. Consequently, the forfeiture was invalid.
Allyson Colby is a property law consultant
