What is Forfeiture?

What is Forfeiture?

Forfeiture is the freeholder's legal right to end your lease early because you've broken one of its terms. In plain English: if you breach your lease, the freeholder can apply to the court to take your flat back. It is the most extreme action a freeholder can take in leasehold law, and the word alone is enough to terrify most leaseholders.

The reality, however, is much less dramatic than the word suggests. Residential leaseholders enjoy strong legal protections, and the courts almost never let freeholders use forfeiture against someone's home. For the remedy to exist at all, your lease must contain a "forfeiture clause" (also called a right of re-entry). Almost every modern long lease includes one as a standard provision, but without it, the freeholder has no power to forfeit.

A Simple Example

Imagine you own a flat with 85 years remaining on the lease. You haven't paid £600 of ground rent and service charges for over a year. The freeholder writes demanding payment, and you ignore the letter.

Eventually, they apply to the First-tier Tribunal (Property Chamber) for a determination that you've breached your lease. Once that determination is granted, they serve you with a Section 146 notice (a formal warning), give you a reasonable time to put things right, and only then can they apply to court for possession.

At every stage of that process, you have legal rights, time to pay up and, if all else fails, the right to apply to court for "relief from forfeiture", which courts almost always grant for residential properties.

Why It Matters to You

Forfeiture matters for three reasons, even if you'll probably never face it yourself.

First, it's the legal backstop that gives freeholders leverage over unpaid ground rent and service charges. The threat alone changes how disputes get resolved.

Second, the existence of a forfeiture clause affects how mortgage lenders view your property. Most lenders require that a lease gives them the right to step in and resolve any financial breaches, allowing them to pay the arrears on your behalf.

Third, forfeiture is being abolished. The government's Draft Commonhold and Leasehold Reform Bill, published on 27 January 2026 and confirmed in the King's Speech on 13 May 2026, proposes to scrap forfeiture of residential long leases altogether. Until that change comes into force, the existing rules still apply, so understanding them matters now more than ever.

The £350 Rule

A freeholder cannot begin forfeiture proceedings for trivial sums. Under Section 167 of the Commonhold and Leasehold Reform Act 2002, you must owe either £350 or more, or have arrears outstanding for more than three years. This applies to ground rent, service charges and administration charges combined.

The "£350" figure makes the headlines, and rightly so, since the idea of losing your home over a few hundred pounds in disputed charges is grotesquely disproportionate. It's also a big part of why forfeiture has been singled out for abolition.

The Forfeiture Process

For a residential long lease, a freeholder must follow a strict legal route. They cannot simply change the locks. Peaceable re-entry while someone is lawfully residing in a property is a criminal offence under the Protection from Eviction Act 1977. They must go through the courts.

For breaches other than rent arrears, the process is:

1. Breach determination. Under Section 168 of the Commonhold and Leasehold Reform Act 2002, the breach must be admitted by you or formally determined by the First-tier Tribunal before any further step can be taken.
2. Section 146 notice. The freeholder serves a formal forfeiture notice under Section 146 of the Law of Property Act 1925, specifying the breach and giving you a reasonable time to remedy it.
3. Reasonable time to remedy. You get a window to put things right, usually weeks or months, depending on the breach.
4. Court proceedings. If the breach is not remedied, the freeholder can apply to court for a possession order.
5. Possession. Only the court can grant possession; and even then, you can apply for relief.

For ground rent arrears specifically, no Section 146 notice is required, but the freeholder must still go through the court. There's no shortcut to taking back your home.

Your Right to Relief from Forfeiture

Relief from forfeiture is the safety net. If you remedy the breach, pay the freeholder's reasonable costs and act promptly, the court has wide discretion to restore your lease, and for residential leaseholders, it almost always does.

You generally have 6 months from the date of any possession order to apply for relief in the county court. The principle behind the court's approach is simple: forfeiture exists to enforce the terms of the lease, not to deliver a windfall to the freeholder. If the freeholder can be put back in the position they would have been in had the breach not occurred, relief should be granted.

This is why genuine forfeiture of a residential long lease is extremely rare in practice. The cases that do succeed almost always involve a leaseholder who has gone missing or who has refused to engage with the process at all.

Forfeiture vs Section 146 Notice

These terms get used interchangeably, but they aren't the same thing.

Forfeiture is the broader concept, the freeholder's right to end the lease.

A Section 146 notice is one step in that process, required only for non-rent breaches. It is the formal warning a freeholder must serve before applying to court.

If you've received a Section 146 notice, forfeiture is being threatened, but it hasn't happened. You still have legal rights, time to respond and, if it ever reaches that point, the right to apply for relief. A Section 146 notice is the opposite of a Section 42 notice: one is a warning from your freeholder, the other is your formal demand to extend your lease.

Future Changes: Is Forfeiture Being Abolished?

Yes, but not yet.

The Draft Commonhold and Leasehold Reform Bill (January 2026) proposes to abolish forfeiture of long residential leases entirely. In its place would sit a court-supervised enforcement regime: freeholders could still pursue genuine breaches, but the court would decide on a proportionate remedy, an order to pay, an order to comply with the lease, or in exceptional cases an order for sale. Crucially, the court could no longer simply terminate the lease.

The government's stated aim, confirmed in the May 2026 King's Speech, is to end the situation where a leaseholder can lose their home, and all of its equity, over a relatively small debt.

Realistically, the bill will take months to make its way through Parliament. Most legal commentators expect 1 to 2 years before the new regime is fully in force. Until then, the current law applies in full.

In Summary

Forfeiture sounds catastrophic, but for residential leaseholders it is one of the most heavily protected processes in property law. Your freeholder must follow a strict legal route, you have multiple opportunities to remedy the breach, and the courts almost always grant relief.

That said, prevention is far easier than cure. The single most effective step you can take to remove forfeiture risk is to extend your lease. A statutory lease extension reduces your ground rent to a peppercorn, which eliminates one of the most common forfeiture triggers altogether.

If you've received any threat of forfeiture, seek specialist advice immediately. And if you haven't, but you'd like to understand where your lease stands today, get your free lease report to see what extending would cost and how much risk it would take off the table.