FLK2 · Property Practice

Leasehold covenants & remedies for breach

SQE1 revision notes — the key rules, leading cases and common traps for this topic, in plain English and current to 2026.

PP.07 — Leasehold covenants & remedies for breach

Enforceability turns on the lease date.

  • "New" leases (granted on/after 1 Jan 1996): governed by the Landlord and Tenant (Covenants) Act 1995. The "touch and concern" privity-of-estate analysis is replaced: on a lawful assignment, the benefit and burden of all covenants pass automatically (s.3), and the outgoing tenant is automatically released (s.5).
  • "Old" leases (pre-1996): privity of contract — the original tenant stays liable for the whole term; covenants pass on assignment only if they touch and concern the land (Spencer's Case; P&A Swift v Combined English Stores).

AGAs. Under the 1995 Act the landlord can require an outgoing tenant to give an Authorised Guarantee Agreement (s.16) guaranteeing the immediate assignee only — not subsequent ones. Anti-avoidance: s.25 voids attempts to exclude, modify or frustrate the Act (e.g. to widen an AGA).

Remedies for breach of tenant covenants:

  • Rent arrears: debt action; Commercial Rent Arrears Recovery (CRAR) for commercial premises (replaced distress); rent deposit; pursue guarantor/former tenant. To recover a fixed charge (rent/service charge/liquidated sum) from a former tenant or guarantor, serve a s.17 notice within 6 months of the charge falling due.
  • Other covenants: damages, specific performance (rare), injunction, self-help/Jervis v Harris clause, or forfeiture.

Forfeiture (the heavy-test area):

  • Requires an express forfeiture clause. Landlord must not waive the right (demanding/accepting rent with knowledge of the breach waives it — distinguish once-and-for-all breaches from continuing breaches).
  • Rent arrears: usually a formal demand unless the lease/statute dispenses with it. Tenant has relief.
  • Non-rent breaches: serve a s.146 LPA 1925 notice — specify the breach, require remedy (if capable) within a reasonable time, and require compensation. Tenant relief under s.146(2).
  • Disrepair: the Leasehold Property (Repairs) Act 1938 applies to leases granted for 7+ years with at least 3 years unexpired; the tenant may serve a counter-notice, after which the landlord cannot forfeit or sue for damages without leave of the court.
  • Residential dwellings: no forfeiture by re-entry while lawfully occupied except by court order (s.2 PEA 1977); for long residential leases the breach must first be admitted or determined (s.168 CLRA 2002 for non-rent breaches; s.81 Housing Act 1996 for service/administration charges).

Common traps:

  • Peaceable re-entry is lawful for commercial premises but unlawful for occupied dwellings.
  • s.146 notice is not needed for rent arrears.
  • Original tenant of an old lease remains liable for the whole term; under a new lease they are released on lawful assignment (subject to any AGA).

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A woman is the treasurer of a small amateur football club. Members pay £20 each month in cash. Under the club rules she accepted on becoming treasurer, she must bank the subscriptions into the club's dedicated account within seven days. One month she receives £200 in subscriptions and spends the cash on her own gas bill that same day. She intends to replace the money from her wages before anyone notices, and pays an equivalent £200 into the club account two weeks later. Which statement best explains how section 5(3) of the Theft Act 1968 applies to the subscriptions when she pays the gas bill?

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More Property Practice topics

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Independent SQE1 revision notes for study — not legal advice; check primary sources before relying on any point. Exam rules are set by the SRA; see the official SQE site.

Leasehold covenants & remedies for breach — SQE1 revision notes (FLK2) | Lawdojo