Forfeiture: the residential spanner in the works?

Forfeiting a lease of commercial premises can be as simple as changing the locks.  But in the case of residential premises, a landlord has to tread with much greater care. Changing the locks is not an option. So says the Protection from Eviction Act 1977which requires a landlord to obtain a Court Order in the case of residential premises.

But  what  is  the  case  where  a  single  lease  comprises  both  a  commercial  and  a residential element? The typical scenario involves a lease of a shop with residential accommodation above it. If the tenant defaults, can you change the locks or not?

In the case of Patel –v- Pirabakaram, the tenant occupied a shop on the ground floor and a residential flat on the first floor. The premises were let on a single lease. The tenant fell into arrears of rent and the landlord changed the locks on the shop. The tenant refused to vacate the flat and the landlord therefore commenced possession proceedings seeking the eviction of the tenant.

The case ended up in the Court of Appeal and the Court ruled against the landlord. The Court found that because part of the property was let as a dwelling, the lease of the premises could only be forfeited by way of a Court Order.  Changing the locks was unlawful and rendered the forfeiture ineffective. The landlord’s claim was therefore dismissed.

The message from this  case is  loud and clear.  A residential  element of  a  lease is always going to trump a commercial element when it comes to the protection of a tenant’s  rights.  If  the  demise  includes  a  residential  element,  the  Protection  from Eviction 1977 is automatically going to be engaged and you need to tread with care.

Even if you are in doubt as to whether the residential part of the premises is occupied or not, proceed with caution and apply for a Court Order rather than changing the locks.  Getting  forfeiture  wrong  can  lead  to  costly  counterclaims  and the  perverse scenario of potentially having to compensate your defaulting tenant.