What is a Section 146 notice?
It is a notice which is served under section 146 of the Law of Property Act 1925. It is served by a landlord on their tenant and is used when the landlord believes the tenant is in breach of some form condition set out in their lease. If a notice is served and not addressed, it can terminate the lease early due to a breach of the lease.
You can only service this notice if there is a right to forfeit provision already written into the lease. The notice confirms that forfeiture proceedings will be brought because a covenant in the lease has been breached unless the breach is not remedied, assuming the breach is capable of being remedied.
This notice is also known as a breach of covenant notice. This type of notice is normally only used in respect of commercial leases, but it can be used in respect of residential leases as well.
What should a Section 146 Notice include?
This notice should include the following:
- It must specify what the breach is;
- If the breach is capable of remedy, require the leaseholder to remedy the breach and if so, within what time frame, and
- in any case require the leaseholder to make compensation in money for the breach.
If the breach is capable of being resolved and the landlord does not give the tenant a reasonable opportunity to fix the breach, then the notice will be void in accordance with section 146(1)(b) of the Law of Property Act. As a landlord, you must ensure the time given is reasonable otherwise the notice will be void. This arises the question of what is reasonable time? Below it explains what reasonable time amounts to.
Under the Law of Property Act you are also entitled to monetary compensation for the breach in addition to the breach being remedied. The compensation required must also be reasonable. If you do not claim compensation in the notice, then the notice is still valid, but you cannot later claim damages for the breach complained of. If, as a landlord, you are going to want compensation ensure that it is asked for in the notice.
If you are unsure what should be included within the S146 notice, then please seek legal advice. This will result in the notice being performed correctly and included everything it needs to.
When is it used?
A S146 notice should be used:
- to give notice to a tenant that they are in breach of the lease
- to inform the tenant that the breach must be put right
- to take the first step to forfeiting the lease if the breach is not rectified
If the breach is non-payment of the rent, service charges or administration charges the landlord cannot serve the notice unless the arrears are over £350 or includes a payment that has been outstanding for 3 years.
The tenant must be aware that they are in breach of the lease. If the tenant is breaching the lease, then as a landlord you should make them aware.
Although the most common type of covenant breach is non-payment of rent (for which a S146 is not required), for purposes of Section 146 notices, covenant breaches often involve:
- Tenants making alterations to the property without consent;
- Leaseholders removing carpets and installing hardwood flooring;
- Non-payment of service charges (if these are separate from the rent);
- Noise complaints;
- Allowing pets on the property (more common in residential tenancies);
- Issues regarding parking spaces;
- Leaks or damage to the property caused by negligence of tenant;
- Repairing obligations (although these usually relate to the landlord); and
- Sub-letting parts or whole of the property without consent.
A landlord that becomes aware of a breach should raise the issue in writing immediately with the tenant. If the tenant does not fix the breach within the time set out in the letter, then the section 146 notice should be served on the tenant without delay.
How much time should a landlord provide a tenant to rectify a breach?
A S146 notice should provide the tenant a “reasonable” time to rectify the breach. What is “reasonable” will depend on the specific situation. For example, more time will need to be given to a tenant who needs to repair significant damage compared to removing their vehicle from another tenants parking space. If in doubt, give a bit more time than you think is necessary, to reduce the risk of the notice being found to be invalid.
What are the consequences of breaches of covenants by tenants?
First, tenants will be expected to rectify any breaches. If they fail to rectify the breaches, they can be served with a Section 146 notice and if they still fail or refuse to rectify the breach and pay any demanded compensation, the lease can be forfeited. If as a tenant you are told you are breaching the lease, if you agree that you are in breach of lease then you must attempt to rectify it. If you dispute the allegation, take legal advice urgently. Do not ignore it.
What are the next steps after a breach of covenant notice has been served?
Once the notice has been served, landlords should make sure that the tenant has received it and understands what has been breached. The landlord then must provide a reasonable time for the breach to be remedied.
If a tenant fails to rectify the breach, steps can be taken towards forfeiture of the lease, repossession as well as any claiming compensation. If you require any more information, it is advised that you take legal advice. If the tenant fails to comply, the landlord can take steps to terminate the tenancy, resulting in the tenant being evicted from the property.
If the tenant accepts the contents of the section 146 notice but wishes to avoid being evicted, they should comply with its requirements as soon as they are able. If you are in this situation and you want to comply with the notice then speak to your landlord, let the landlord know what you are doing. If you think you will need more time to comply then you will need to ask the landlord. It is likely that if the request is reasonable then they should accept it.
It is possible for a tenant to not agree with the contents of the S146 notice if they believe they are not in breach, if you believe you can argue the contents it is advised that you seek legal advice. It would also be advised to do this as soon as possible.
If the tenant does not fix the breach within a reasonable time then the landlord can then commence proceedings in the County Court for forfeiture. The tenant has the right to apply to the court from relief against the order being sought in accordance with section 146(2) of the Law of Property Act 1925.
If such an application is made, the tenant will need to justify why the breach has not been remedied to date and when and how it will be.
If in doubt, take legal advice on lease breaches by your tenant, or the service of a Section 146 notice by your landlord.
Disclaimer – our articles are designed to give you guidance and information. There is no substitute for proper direct advice, particularly as everyone’s circumstances are different. If anything in this article may affect you, please contact us for advice that is specific to your circumstances.