Forfeiture of residential leases: is incorrect format of a demand fatal to validity?

Whether a notice drafted in the incorrect form was validly served

The background

In Cheerupmate2 Ltd v Calce [2018], the tenant held land under a long lease. A rent of £2 per annum was payable in two instalments each year. Under the terms of the lease, the landlord was able to forfeit the lease if the rent was in arrears for two years. In 2015, the landlord served a notice stating that rent was payable from 25 March 2010 to 25 March 2015.

The notice served was not in the form prescribed by the Landlord and Tenant (Notice of Rent) (England) Regulations 2004, which had been very slightly amended in April 2011. The landlord purported to forfeit the lease on 21 April 2015, and subsequently applied to HM Land Registry to close the leasehold title. Both First-tier Tribunal and Upper Tribunal found against the landlord on the basis that the notice was invalid and the forfeiture was premature.

The decision

The Court of Appeal ultimately dismissed the landlord’s appeal. In considering the validity of the landlord’s notice, the Court referenced, amongst other points, the clarity of the information contained in the notice, whether the notice contained all the information required by the Commonhold and Leasehold Reform Act 2002, and the fact that the variation to the prescribed form had been made by a correction notice which the Court found did not alter the substance of the notice. As a result, the minor alteration to the form of notice did not alter its substance sufficiently that it could be invalid.

In deciding whether the forfeiture was premature, the Court considered when the rent had become due. Referencing s.166 of the 2002 Act, the rent payable under a long lease such as this was not due until the landlord served notice specifying the amount and date due. The ‘grace period’ only began once rent had fallen due, and under the lease the landlord had to wait for two years after the date specified in the notice to forfeit. This aspect of the appeal therefore failed, and the landlord’s appeal was dismissed.

Advice and action for landlords

This case is an important guide for landlords who may consider forfeiture in circumstances where, in particular low-value, rents are overdue. Whilst the Court took a pragmatic view in considering the form of notice, finding that its substance was sufficient to validate it, the landlord could not forfeit until a period of two years had elapsed following service of such notice.

Landlords are advised to seek legal advice as early as possible when rent falls into arrears, allowing them to monitor the accrual of arrears and take action as soon as it becomes necessary, to ensure timely recovery or re-entry as appropriate.