Leasehold: Covenants and Remedies
A lease is a chain of promises, and the question this topic turns on is brutally simple: when the chain has moved through three, four, five pairs of hands, who is still holding the other end? Get the date of grant wrong and you will advise a client to chase a landlord — or a tenant — who has been out of the picture for a decade and owes nothing.
Everything in this topic radiates from a single date. The Landlord and Tenant (Covenants) Act 1995 came into force on 1 January 1996, and it split the leasehold world into two regimes that behave nothing like each other.
A lease granted before 1 January 1996 is an "old tenancy." A lease granted on or after 1 January 1996 is a "new tenancy." The dividing line is the date of the grant, not the date the lease was negotiated — so a tenancy created under a contract or court order made before 1 January 1996 is still an old tenancy even if the actual grant completes years later. The law froze the parties' expectations at the moment they struck the deal, not the moment the paperwork caught up.
This is the first fact you test on every leasehold covenants question: find the grant date, classify the tenancy, and only then reach for the right set of rules. Old and new tenancies answer the question "who is liable?" in almost opposite ways.
Under the old-tenancy regime — the common law position the 1995 Act was built to escape — liability tracks the original contract, not who currently holds the lease.
The original tenant remains contractually liable to the landlord for the covenants for the entire term, even after assigning the lease away to someone else entirely. This is privity of contract, and it is unforgiving: it survives assignment after assignment, so a landlord can, in principle, pursue the very first tenant for rent arrears that accrued years after that tenant sold up and left, caused entirely by a stranger three assignments down the line. Picture a solicitor advising a client who signed a 25-year lease in 1990, assigned it in 1995, and is now being chased for arrears run up by the current occupier in 2026 — under an old tenancy, that liability is real, and it is exactly the trap this rule exists to warn students about.
The landlord's side mirrors this. The original landlord remains liable on the landlord covenants for the whole term unless expressly released by the tenant — release is not automatic; someone has to ask for it and get it in writing.
What about the people in between — the assignees? They are bound by a narrower but still potent doctrine: privity of estate. An assignee of an old tenancy is bound by, and can enforce, any covenant that "touches and concerns the land" — repairing obligations, user restrictions, rent — for as long as they hold the estate. This rule is centuries old, tracing to Spencer's Case (1583), and it is the reason a purchaser of a leasehold interest inherits obligations they never personally negotiated: the covenant runs with the land, not with the person.
The practical upshot for an old tenancy is a landlord's dream and a departing tenant's nightmare: multiple people can be liable simultaneously — the original tenant on privity of contract, and the current assignee on privity of estate — and the landlord can choose whom to sue.
Parliament's fix for the "haunted by tenants past" problem is section 5 of the Landlord and Tenant (Covenants) Act 1995, and it applies only to new tenancies.
Section 5 provides that on assignment of the whole of the premises, an assigning tenant is automatically released from the tenant covenants of the tenancy, and simultaneously loses the benefit of the landlord covenants. The same automatic release operates on the landlord's side: assigning the reversion releases the landlord from the landlord covenants owed to that tenant.
This is not a discretionary release the parties negotiate — it is automatic, by operation of statute, the moment a qualifying assignment happens. Structurally, this abolishes ongoing privity-of-contract liability for new tenancies: once you assign and walk away, you are gone, in a way the original 1990 tenant above never could be. This single mechanical fact is why so much of modern commercial leasing practice — guarantees, AGAs, the section 17/19 machinery below — exists: landlords lost their free "chase anyone in the chain" insurance policy, and had to build contractual and statutory substitutes.
When Release Doesn't Happen: Excluded Assignments
The automatic release is not unconditional. Section 11 defines an "excluded assignment" as one made in breach of a covenant in the lease, or by operation of law — the classic examples being an assignment on the tenant's death or bankruptcy, where nobody actually "assigned" anything in the ordinary sense. Where the assignment is excluded, the release under section 5 doesn't switch off entirely — it is simply deferred until the next assignment that is not excluded. The tenant who assigned in breach, or whose trustee in bankruptcy assigned the lease, stays on the hook until a clean assignment finally happens.
Authorised Guarantee Agreements: The Landlord's Substitute for Privity
Because section 5 strips away automatic continuing liability, landlords negotiated a contractual replacement, and Parliament gave it statutory blessing in section 16: an Authorised Guarantee Agreement (AGA). A landlord can make consent to assign conditional on the outgoing tenant entering an AGA, under which that tenant guarantees performance by their immediate assignee — and only that assignee. This is the detail examiners love to probe: an AGA does not reach through to guarantee any subsequent assignee down the chain. If tenant A assigns to B (guaranteeing B under an AGA) and B later assigns to C, A's AGA says nothing about C's defaults — A's exposure ends when B assigns onward, unless A is asked to enter a fresh AGA at that point too. Each assignment resets the guarantee chain; there is no unbroken line of guarantors stretching back to the original tenant the way old-tenancy privity of contract would create.
Even with an AGA in place, a landlord's ability to recover from a former tenant or guarantor is time-limited and procedurally strict — this is where the 1995 Act protects them, not the landlord.
Section 17: The Six-Month Notice
Section 17 requires a landlord to serve a default notice on a former tenant or guarantor before recovering a "fixed charge" — rent arrears being the paradigm example — from them. That notice must be served within six months of the fixed charge becoming due, and it must use the prescribed statutory form set out in secondary legislation; a home-made letter, however clear, will not do.
Miss the six-month window and the consequence is absolute: failure to serve within time permanently bars recovery of that specific charge from that former tenant or guarantor. Not "reduces the claim," not "gives the tenant a defence to raise" — the right simply ceases to exist for that charge. A landlord who lets arrears build up for eight months before writing to the guarantor has, for that period's rent, lost the chase entirely, even though the guarantor may still be liable for later charges properly notified in time.
Section 19: The Overriding Lease as a Reward for Paying Up
If a former tenant or guarantor does pay the fixed charge demanded under a section 17 notice, section 19 compensates them with a powerful right: they can require the landlord to grant them an overriding lease. This new lease is inserted between the landlord's reversion and the defaulting tenant's existing lease, which has the striking effect of converting the party who paid up into the immediate landlord of the defaulting tenant. Having paid someone else's rent, they are handed the tools to do something about it — because as the defaulting tenant's new landlord, they now hold the power to forfeit the defaulting tenant's lease or re-let the premises themselves. It converts a passive guarantor's payment into an active recovery mechanism.
The table below is the fastest way to keep old and new tenancy consequences straight under exam pressure.
| Issue | Old tenancy (pre-1996) | New tenancy (1996 onward) |
|---|---|---|
| Original tenant after assigning | Remains liable for whole term (privity of contract) | Automatically released on assignment of whole premises (s.5) |
| Original landlord after assigning reversion | Remains liable unless expressly released | Automatically released on assignment (s.5) |
| Assignee's liability | Bound by covenants touching and concerning the land (privity of estate, Spencer's Case) | Bound while holding the lease; released on their own onward assignment |
| Guarantee of future assignees | None needed — original tenant already liable throughout | Landlord may require an AGA (s.16), guaranteeing only the immediate assignee |
| Recovering a fixed charge from a former party | No time limit under the 1995 Act | Must serve s.17 notice within 6 months or lose that charge permanently |
Once liability is established, the question shifts to what the landlord can actually do about a breach. SQE1 tests three routes: the debt action, forfeiture, and Commercial Rent Arrears Recovery — and each has its own procedural gate.
The Debt Action
The most straightforward remedy for unpaid rent is simply to sue for it: a landlord may recover unpaid rent from a tenant by bringing a debt action for a liquidated sum. No proof of loss, no mitigation argument from the tenant — rent is a debt, not damages, and the landlord need only prove the sum is due.
Forfeiture: Ending the Lease Early
Forfeiture lets a landlord bring the lease to a premature end following a tenant's breach, but only where the lease itself reserves a right of re-entry or forfeiture — there is no free-standing common law forfeiture right independent of the lease terms.
For breaches other than non-payment of rent, section 146 of the Law of Property Act 1925 erects a mandatory notice hurdle before forfeiture can be enforced. The notice must:
- Specify the breach complained of — vague accusations will not do;
- Require the tenant to remedy the breach, but only if the breach is capable of remedy (some breaches, like an irremediable subletting in breach of covenant, cannot be "fixed" after the fact); and
- Require the tenant to pay compensation for the breach, if the landlord wants it.
Crucially, a section 146 notice is not required at all for forfeiture based on non-payment of rent — Parliament treated rent arrears as self-evidently urgent and didn't want landlords delayed by a formal notice-and-remedy period. Instead, forfeiting for rent arrears at common law generally requires the landlord to have made a formal demand for the rent, unless the lease expressly dispenses with that requirement (as most modern commercial leases do).
Waiver: The Trap That Catches Careless Landlords
Forfeiture rights are fragile once a breach is known about. A landlord waives the right to forfeit if, with knowledge of the breach, they perform an unequivocal act recognising the lease's continuation — and the paradigm example is rent. Demanding or accepting rent that falls due after the landlord learns of the breach waives the right to forfeit for that breach. The logic is that you cannot simultaneously say "this lease continues, please pay me" and "I intend to end this lease" — the two positions are irreconcilable, and the law picks the one the landlord's own conduct demonstrated.
Two refinements matter enormously in practice. First, accepting rent that accrued before the breach occurred does not waive anything — there is nothing inconsistent about collecting money owed for a period when the tenant was still behaving properly. Second, and this trips up even careful practitioners, marking a demand or acceptance "without prejudice" does not prevent waiver — you cannot magic away an unequivocal act of recognition with a form of words; the underlying conduct still speaks for itself.
Method of Forfeiture: Peaceable Re-Entry vs the Courtroom
Where the lease is purely commercial, with no residential element, a landlord may forfeit simply by peaceable re-entry — changing the locks, without needing a court order first. That changes the moment residential occupation enters the picture: section 2 of the Protection from Eviction Act 1977 requires forfeiture to proceed by court proceedings wherever any part of the let premises is occupied as a dwelling and someone is lawfully residing there. A landlord who changes the locks on a mixed commercial/residential unit with a lawful residential occupier in situ has committed an unlawful eviction, not a valid forfeiture.
Relief from Forfeiture
Forfeiture is not necessarily the end of the story for the tenant. A tenant may apply to the court for relief from forfeiture after the landlord has forfeited, whether by peaceable re-entry or by court proceedings — relief effectively reinstates the lease. Where the forfeiture was by peaceable re-entry, the application for relief must be made within a reasonable time, a fact-sensitive question the court assesses on the circumstances of each case rather than a fixed statutory clock.
Commercial Rent Arrears Recovery (CRAR)
CRAR is the modern, statutory replacement for the old common law remedy of distress, found in Schedule 12 to the Tribunals, Courts and Enforcement Act 2007. It lets a landlord seize and sell a tenant's goods to recover unpaid rent without going to court at all — a genuinely self-help remedy, but hedged with strict conditions that reflect Parliament's discomfort with reviving anything resembling the old distress regime unchecked.
CRAR is available only where the demised premises are used wholly for commercial purposes under a single lease — the moment a single lease mixes commercial and residential use, CRAR is off the table entirely, even for the commercial portion. Before exercising it, the landlord must be owed net unpaid rent equivalent to at least seven days' rent, and must give the tenant at least seven clear days' notice of enforcement before seizing goods. And CRAR is narrow in what it can chase: it recovers sums that constitute rent strictly defined — it cannot be used to recover service charge or insurance rent unless the lease itself reserves those sums as rent.
A distinct remedial problem arises with repairing covenants specifically, and it deserves separate treatment because of a clever piece of drafting and the statutory obstacle it was designed to sidestep.
Many leases contain a clause letting the landlord enter the premises and carry out repairs after the tenant's default, then recover the cost from the tenant — a so-called Jervis v Harris clause, named for the case that confirmed how it should be characterised. Jervis v Harris established that the landlord's cost of carrying out those repairs is recoverable as a debt, not as unliquidated damages. That single characterisation decision matters enormously, because classifying the claim as a debt takes it outside the restrictions on damages claims imposed by the Leasehold Property (Repairs) Act 1938.
Why does that escape matter? Because the 1938 Act is a serious procedural obstacle for a landlord suing in damages for disrepair. It applies where the lease was originally granted for a term of seven years or more, and where three years or more of the term remain unexpired at the relevant date — and, thanks to section 51 of the Landlord and Tenant Act 1954, that seven-year threshold was extended from its originally narrow scope to non-agricultural leases generally. Where the 1938 Act bites, the landlord's section 146 notice must expressly refer to the tenant's right to serve a counter-notice under the 1938 Act, and the tenant then has 28 days from service of that section 146 notice to serve one. Once a valid counter-notice lands, the landlord cannot simply proceed — they need the leave of the court to pursue either forfeiture or a damages claim for the disrepair, a permission the court will only grant on specified statutory grounds.
A Jervis v Harris clause sidesteps all of this. Because the landlord is claiming a debt for work already done, rather than damages for a breach not yet remedied, none of the 1938 Act's counter-notice-and-leave machinery is engaged. For a client negotiating a new commercial lease, that is precisely why a well-drafted Jervis v Harris clause is worth insisting on: it converts a procedurally hobbled damages claim into a clean, fast debt action.