Forfeiture of Commercial Leases – A Practical Guide for Landlords and Tenants (With Recent Case Law)

Forfeiture is a key remedy available to landlords when a commercial tenant breaches the terms of a lease. Recent case law continues to clarify how the courts approach forfeiture, insolvency‑based breaches, and applications for relief. The following examples illustrate current judicial trends.

Recent Case Law on Forfeiture

1. Sik v Malik [2025] EWHC 383 (Ch) – Relief from Forfeiture for Rent Arrears

This recent High Court decision is an important restatement of the principles of relief from forfeiture where a landlord has re‑entered for rent arrears.

Key Points from the Case

• The landlord forfeited by peaceable re‑entry for rent arrears. The tenant applied for relief which was disputed by the Landlord.
• The County Court granted relief on terms requiring payment of arrears, and 50% of the rent during the period after re‑entry.
• The landlord appealed, arguing that the court should have required full rent for the period after re‑entry.
• The High Court ordered that the county court erred in law by ordering that the tenant should pay only half of the rent arrears. Unless the landlord had benefited by using the property during the forfeiture period, relief would be granted on condition that the tenant paid the rent arrears, and any costs properly associated with re-entry, in full.

2. SBP 2 SARL v 2 Southbank Tenant Ltd [2025] EWHC 16 (Ch) – Insolvency Clauses and Section 146

This High Court judgment provides important clarity where forfeiture is based on insolvency‑related clauses, especially those tied to statutory definitions under the Insolvency Act 1986.

Key Points from the Case

• The landlord served the guarantor with a section 146 notice alleging that the guarantor was in breach of condition of the lease because it was unable or deemed unable to pay its debts within the meaning of sections 123(1)(e) or 123(2) of the IA 1986.
• The guarantor claimed that it was not in breach of condition at the time of service of the section 146 notice because the condition incorporated the statutory language of the IA 1986 and so required the inability to pay to have been established by the Court.
• The Court held that no forfeiture right had crystallised because insolvency had not been judicially determined.

This case is a strong reminder that where a forfeiture clause is tied to statutory insolvency definitions, proof—not presumption—is required.

How These Cases Affect Landlords and Tenants

For Landlords

• Check forfeiture clauses carefully, especially insolvency‑based grounds. Courts require strict compliance with statutory definitions.
• Peaceable re‑entry remains risky, especially where relief from forfeiture is likely.

For Tenants

• Relief from forfeiture remains a powerful remedy, and courts are willing to grant it where arrears can be paid and breaches remedied.
• Tenants should apply for relief promptly and maintain evidence of financial ability to comply with conditions.
• Where landlords rely on insolvency‑based clauses, tenants may have strong arguments if insolvency has not been judicially proven.

Written by David Bowers, Associate Solicitor, Judge & Priestley LLP. 

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