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Forfeiture of leases

As part of WHQ’s What I’d Change about Housing and the Law feature, Nick Roberts and Nick Hopkins make the case for a leasehold reform. 

The Law Commission would be keen to see the reform of the law on the forfeiture of leases. Through forfeiture, a tenant or leaseholder can be deprived of the lease that they are holding. This is an area of law which in practice mainly affects commercial tenants but it can also affect long leaseholders of residential properties, particularly owners of flats who fail to pay ground rent or services charges, or who breach their leases in other ways.

The law has ancient origins, and over the centuries it has become unduly technical and fraught with traps for the unwary. But, most seriously, breaching a lease can result in a leasehold owner losing their investment, and the ground landlord making a windfall gain.

In a report in 2006, we recommended sweeping away the existing law and replacing it with a more rational system. The courts could still order leaseholders to comply with the terms of their leases. If they failed to do so – and especially if they persisted in failing to meet their financial obligations – the courts would as a last resort order the sale of a leasehold property. But it would be a lot fairer, as the landlord would then get only what it was owed. The balance – after paying off any other mortgages – would be paid to the leaseholder, and the landlord would not make a windfall gain.

Successive Westminster governments have not implemented the report – we think its adoption is long overdue.

Nick Roberts, lawyer, and Nick Hopkins, law commissioner, Law Commission

If you would like to contribute to Part 2 of this feature, tell WHQ what you would change about the law in relation to housing and why by emailing the editor, Jules Birch, at [email protected]

 


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