Lease Forfeiture of Commercial Premises – Legal Guidance

When a tenant breaches a lease, landlords may be able to forfeit(end) the lease and recover the premises. This page explains what can be forfeited, the role of a forfeiture clause, when a section 146 notice is required, how peaceable re-entry works for commercial units, the risk of waiver, and relief from forfeiture. It also covers residential restrictions (for long leases), insolvency limits, and CRAR versus forfeiture.

Commercial leases Long residential leases s.146 LPA 1925 Peaceable re-entry Relief from forfeiture

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England & Wales. General guidance for property professionals; not legal advice.

What leases can be forfeited?

Commercial leases

Most commercial leases include a right of re-entry/forfeiture for non-payment of rent and for specified breaches (use, assignment, alterations, repair, etc.). Forfeiture may be by peaceable re-entry(locks changed while unoccupied) or by court proceedings.

Long residential leases (flats)

Forfeiture is heavily restricted. Before serving a s.146 notice for non-rent breaches, the breach normally must be admitted or determined by a court/tribunal (CLRA 2002, s.168). For service-charge/administration-charge arrears, there are additional “final determination” and de minimis thresholds (CLRA 2002, s.167).

Assured/AST & secure tenancies

Residential assured/AST or secure tenancies are not forfeited. They are ended via the Housing Acts (e.g., s.8/s.21 HA 1988 or secure tenancy grounds) with a court order.

Mixed-use premises

If the let premises include a dwelling occupied as a residence, do not attempt peaceable re-entry. A court order is required (Protection from Eviction Act 1977). Where the dwelling is a separate demise , the commercial unit may be forfeited on its own.

What is a forfeiture clause?

A lease must normally reserve a right of re-entry/forfeiture. The clause sets out the breaches that trigger forfeiture and any conditions (e.g., rent unpaid for 14/21/28 days ). Without such a clause, the landlord will usually be unable to forfeit.

Non-payment of rent: no s.146 notice is required. Check the clause for any grace period and whether formal demand is dispensed with (common in modern leases).
Other breaches: a s.146 notice is usually required (see below).
Insolvency limits: during an administration moratorium or insolvency process you may need the court’s or office-holder’s consent before forfeiting.

Section 146 notice (non-rent breaches)

Before forfeiting for a breach other than non-payment of rent, a landlord generally must serve a Law of Property Act 1925, s.146 notice on the tenant. The notice must:

Specify the breach relied on with sufficient detail; and
Require remedy if the breach is remediable, allowing a reasonable time ; and
Require compensation for the breach, if demanded.

Long residential leases: For non-rent breaches, the landlord may not serve s.146 until the breach is admitted by the tenant or determined by a court or the First-tier Tribunal (CLRA 2002, s.168). For service/administration charges and ground rent, further conditions apply (including the trivial sums rule under s.167 and prescribed ground-rent demands).

Forfeiture methods

Non-payment of rent

Step 1 Confirm rent due and unpaid; check forfeiture clause (grace period/dispensed demand).

Step 2 Choose route: peaceable re-entry(commercial only, unoccupied, no breach of the peace) or issue possession proceedings.

Step 3 Secure and inventory the premises; deal with goods under the Torts (Interference with Goods) Act 1977 procedures.

Step 4 Expect a potential tenant application for relief from forfeiture(see below).

Other breaches (use/alterations/repair etc.)

Step 1 Serve a compliant s.146 notice(and for long residential, obtain breach determination first).

Step 2 Allow reasonable time to remedy; monitor compliance.

Step 3 If not remedied, forfeit by court proceedings(or peaceable re-entry where lawful for commercial premises).

Step 4 Relief remains possible at the court’s discretion (usually upon remedy and payment of costs/compensation).

Waiver of the right to forfeit

If the landlord affirms the lease after knowledge of a breach, the right to forfeit for that breach is usually waived. Common examples:

Demanding or accepting rent accruing after the breach date.
Serving enforcement demands (including some uses of CRAR) that treat the lease as continuing.
Granting consents or taking steps inconsistent with ending the lease.

Waiver rules are technical—take advice before demanding rent or using CRAR if you might forfeit.

Relief from forfeiture

Courts have a broad power to restore the lease on terms.

Non-payment of rent: relief is commonly granted if arrears, interest and landlord’s costs are paid promptly (timings depend on whether re-entry has occurred and the court seized of proceedings).
Other breaches: discretionary relief under s.146(2) LPA 1925 is usually granted if the breach is remedied (or compensation paid) and future compliance assured.
Who can apply: tenants, sub-tenants and mortgagees may seek relief in appropriate cases.

Act quickly: delay can defeat relief, especially after peaceable re-entry.

CRAR or forfeiture?

CRAR(Commercial Rent Arrears Recovery) allows enforcement agents to take control of goods for pure rent owed under a commercial-only lease (no residential occupation), subject to statutory notice and minimum arrears. It doesn’t end the lease.

Using CRAR can, in some circumstances, amount to waiver of the right to forfeit for those arrears.
Forfeiture ends the lease and recovers possession—appropriate where you want the premises back.
Both routes have pre-conditions and risks; choose deliberately.

Key limits & cautions

Insolvency moratoria: during administration (Sch B1 para 43 IA 1986) or certain other processes, you need permission or consent to forfeit.
Residential occupation: never attempt peaceable re-entry of premises occupied as a dwelling—obtain a court order (Protection from Eviction Act 1977).
Goods left on site: follow the Torts (Interference with Goods) Act 1977 notice procedure before disposal.
Service of notices: serve s.146 on the tenant and consider also serving mortgagees and known sub-tenants; check any contractual service provisions.

📦 What We Need to Get Started

A copy of the lease
Rent statement or breach details
Tenant and property address
Your authority to act(landlord, agent, or solicitor)

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FAQs

Do I need a s.146 notice for unpaid rent?

No. For non-payment of rent a s.146 notice is not required. Ensure the lease’s forfeiture clause has been triggered (e.g., rent unpaid for the stated period) and beware of waiver.

Can I change the locks if staff are inside?

No. Peaceable re-entry must be without a breach of the peace and is typically done early mornings when the property is empty. If the premises are permanently occupied(e.g., residential occupation or 24/7 staffing), contact us for advice and use court proceedings where required.

What is “relief from forfeiture”?

A court power to restore the lease on terms—commonly granted for rent arrears if paid with costs; discretionary for other breaches if remedied. Act quickly.

We used CRAR—can we still forfeit?

Possibly, but some CRAR steps can waive the right to forfeit for the same arrears. Take advice before alternating remedies.

Can I forfeit a flat for small service-charge arrears?

Restrictions apply. For long residential leases, forfeiture for service/administration charges or ground rent is barred for trivial sums (CLRA 2002, s.167) and usually requires a prior determination.

Need help?

We deliver compliant, welfare-aware forfeitures across England & Wales. Instruct us online or see our forfeiture service page for scope, SLAs and reporting.

Last updated: 7 October 2025 . This is general information, not legal advice.