The landlord's blunt instrument

Forfeiture is a weapon for landlords to use against tenants. It dates back to feudal times and reflected what we would now judge to be a barbaric view of the relationship between the owner and occupier of a home.

Forfeiture means the ending of a lease and repossession of the property as a result of conditions not being met. It is the landlord's ultimate means of controlling a tenant.

Lawful but unpopular
The exercise of a right of forfeiture without a court order – by what is called "peaceable re-entry" – is still lawful in non-housing situations. But forfeiture, even with a court order, is unpopular in the social housing sector, and rightly so – although it must sometimes be used as a last resort in the case of long leaseholds. In other contexts it is often used or threatened by landlords and can cause particular difficulties in the context of long leaseholds.

The unrestricted use of forfeiture as a weapon for unscrupulous landlords has been restricted in more recent years, so that:

• where the property is used as the occupier's dwelling the landlord cannot now recover possession without first obtaining a court order
  
• the Protection from Eviction Act 1977 applies and makes unlawful eviction a criminal offence
  
• under provisions in the Housing Act 1996, the landlord cannot exercise the right of forfeiture for unpaid service charge unless the service charge is agreed or has been admitted by the tenant or has been determined by decision of a court or other arbitration tribunal.

Forthcoming changes
The Commonhold and Leasehold Reform Act 2002 contains provisions that are expected to come into effect in the next few months. Although the detail has not yet been finalised, the intention is that it will place restrictions on the use of forfeiture under which:

• landlords of long-leasehold dwellings will not be able to forfeit for small amounts of unpaid rent or service charge. It is anticipated that the landlord will not be able to forfeit for debts of less than £500 or such lower sum as may be specified (it is anticipated that £350 will be specified) unless they have been outstanding for a lengthy period. Although this has yet to be finally decided, it is suggested that this period will be three years
  
• landlords will only be able to take forfeiture action when a court or leasehold valuation tribunal has determined that a breach of an obligation in a lease has occurred or the leaseholder has admitted that such a breach has occurred
  
• notice of forfeiture cannot be served until 14 days after that final determination or the admission
  
• new provisions will apply to outstanding debts of rent, service and administration charge
  
• forfeiture for failure to pay service charge cannot be exercised after a determination in arbitration proceedings, unless the reference to arbitration is under an agreement made after the dispute has arisen. A provision in a lease saying that all disputes must be referred to arbitration will not bind a tenant for this purpose.

Under the new rules, landlords of long-leasehold dwellings will not be able to forfeit for small amounts of unpaid rent or service charge

New requirements
It should also be noted that the 2002 act will introduce new requirements – in addition to the existing requirement that the name and address of the landlord and a service address in England or Wales must accompany all service charge demands – for statements of tenants rights and obligations in relation to service charges to be contained in all demands in accordance with statutory regulations.

If these have not been complied with, the requirement to pay cannot be enforced and the tenant will have a statutory right to withhold payment.

These changes should be noted by all landlords and also by those who provide advice to tenants and leaseholders who are threatened with eviction.

It will be necessary to change existing procedures where it may be necessary to consider the use of forfeiture as the ultimate sanction.