Long Residential Leases - beware of Section 146!

Section 146 Notices (notices served under Section 146 Law of Property Act 1925) are used by Landlords to warn their tenant that they are in breach of the terms of their lease and that they must remedy the breach, by putting things right. Typically this would involve carrying out repairs to ensure that the landlord’s property does not deteriorate and lose value.

If the tenant fails to remedy the breach within the time given, the landlord can rely on the s146 Notice to bring possession proceedings (“forfeiture”) for recovery of the property.

The use of s146 Notices is well established for commercial leases, where the landlord owns the property and the tenant is paying rent.

Ultimately the aim of the landlord is to either get their property repaired, or force the tenant out.

However, they can also be used where a residential property has been bought on a leasehold basis. This often applies to flats, where the landlord retains control over the rest of the building. Here the flat owner is not renting the flat; he has paid the full purchase price. Despite this, he must comply with the terms of the lease, and failure to do so could ultimately result in a s146 Notice being served on him. If he fails to remedy the breach or seek relief, he risks losing the whole of his property to the landlord, which would result in a substantial windfall for the landlord.

Just such a situation occurred in the recent case of Malik v McCadden where the owner of a £600,000 first floor flat has been ordered to give possession of his flat to his landlord because he carried out renovation works in breach of the terms of his lease.

The facts of this case are quite unusual, but the outcome has renewed calls for the law to be changed. It serves as a warning to take s146 Notices seriously and to take legal advice urgently. Lawyers in both our property and dispute resolution teams can help.

Published 20 November 2018

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