The Case: Cheerupmate2 Ltd v Calce [2017] UKUT 377 (TCC)

Background

Cheerupmate2 Ltd became the landlord of a long residential lease in March 2015. Shortly after, the landlord sent a letter to the tenant which enclosed an old form s166 Commonhold and Leasehold Reform Act 2002 (“2002 Act”) notice.

The s166 notice demanded unpaid ground rent of £11, for the period March 2010 to March 2015, to be paid by April 2015. The tenant failed to comply and the landlord attempted to forfeit the lease by peaceable re-entry.

Decision

The case came before the First Tier Tribunal who held that the landlord’s forfeiture was invalid. The Upper Tribunal subsequently affirmed the decision. There were three reasons:

  1. The s166 notice. The s166 notice was invalid. It was an old form notice which did not contain the correct wording as to the effect of s167 of the 2002 Act. The wording had been updated and clarified in 2011. As the notice contained the old wording, it was difficult for the tenant to understand the effect of s167 of the 2002 Act.
  2. The right to forfeit in the lease. Whilst the lease authorised the landlord to forfeit the lease if the rent was in arrears for 2 years, this 2 years ran from the date specified for payment in the s166 notice i.e. April 2015. The 2 years did not run from the date of payment in the lease (which ran back to 2010).
  3. The statutory right to forfeit. S167 of the 2002 Act provides that a landlord can forfeit the lease if the arrears exceed £350 or if the rent has been in arrears for 3 years. In this instance the landlord did not satisfy either. The 3 years (like the right to forfeit in the lease) ran from the date specified for payment in the s166 notice i.e. April 2015. The 3 years did not run from the date of payment in the lease (2010).

Important Point for Landlords

Landlords of long residential leases should therefore ensure that:

  • They serve the correct form of s166 notice demanding payment of rent; and
  • They do not delay in serving the notice so that time for forfeiture begins to run.

For further help or advice in relation to this article, please contact Lupton Fawcett’s property dispute Partner and specialist Hayden Glynn.

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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