Think before you forfeit: Why following the right process matters

This blog was co-authored by Peter Barnard and Amelia Sharples.

Lease forfeiture remains one of the most effective remedies available to landlords and management companies when a tenant breaches the terms of a lease, particularly where significant arrears have accrued. However, exercising the right to forfeit is not always straightforward, and getting the procedure wrong can invalidate the forfeiture altogether. The Recent High Court Decision in ABN Group Holdings Ltd v Yarrow (PC) 2026 provides a useful reminder that the nature of the property itself can determine which statutory protections apply before a lease can be brought to an end.

Background

The dispute centred on a derelict block of former residential flats. The tenant argued that the premises remained a ‘dwelling’, meaning the landlord was required to comply with statutory notice provisions under section 60 of the Landlord and Tenant Act (LTA) 1987 and section 166 of the Commonhold and Leasehold Reform Act (CLRA) 2002  before forfeiture could take place. The High Court disagreed. It held that whether premises are a ‘dwelling’ is an objective question of fact to be determined at the date of forfeiture. As the building has become derelict and was no longer capable of occupation, it was not a dwelling for the purposes of the LTA 1987 and s166 of CLRA 2002. The landlord was therefore entitled to proceed without complying with those additional notice requirements.

For management companies, the decision highlighted an important practical point: before taking enforcement action, it is essential to understand which forfeiture procedure applies. Where the lease permits forfeiture for non-payment of rent, the landlord can usually exercise the right once the contractual period for payment has expired, without serving a section 146 notice under the Law of Property Act (LPA) 1925. The decision in ABN Group Holdings demonstrates that the court will look at the actual condition and use of the property at the time forfeiture is exercised, rather than simply relying on how the premises were originally described in the lease.

Management companies should also consider the different methods of forfeiture available. Where premises are vacant, peaceable re-entry may provide a quick and cost-effective means of recovering possession, provided it can be carried out without force, disturbance or any conduct likely to cause a breach of the peace. Alternatively, landlords may issue possession proceedings through the court, particularly when premises are occupied, the tenant disputes the breach, or there is a risk that the tenant may challenge the forfeiture. Although it is slower and involves additional cost, court proceedings provide judicial oversight and allow the landlord to demonstrate that the forfeiture has been properly exercised. Whatever route is chosen, landlords must avoid waiving the right to forfeit, for example, by demanding or accepting rent that falls due after becoming aware of the breach, as this may prevent forfeiture altogether.

Key takeaways

The key takeaways from ABN Group Holdings v Yarrow (PC) Ltd are that successful forfeiture depends on not only on establishing rent arrears or another lease breach, but also on following the correct statutory and contractual process. Management companies should review the lease, confirm the right to forfeit has arisen, consider whether the premises attract any statutory protection, and carefully decide whether peaceable re-entry or court proceedings are the appropriate course. Obtaining legal advice before acting can help ensure that an otherwise valid right to forfeit is not lost through procedural error.