Leasehold Covenants and Remedies for Breach

Introduction

Unless the lease contains provisions to stop them, tenants are free to do as they wish with their leasehold property, subject only to the general law. Landlords therefore insist on **tenant covenants** which either **prohibit** certain actions altogether or permit them only **with consent**, so that the landlord retains the degree of control needed to protect its investment. This chapter examines the **three categories of tenant covenant** (absolute, qualified and fully qualified), the **liability of current and former tenants** on those covenants under leases granted before and after **1 January 1996**, and the full range of **landlord's remedies for breach** — debt action, forfeiture, **Commercial Rent Arrears Recovery (CRAR)**, pursuit of guarantors and rent deposits, specific performance, damages, the **self-help (Jervis v Harris) clause**, injunctions and surrender.

Assessment focus

For the SQE1 FLK2 assessment in Property Practice you must be able to **classify tenant covenants**, advise on **who is liable** for a breach (current tenant, former tenants, guarantors) and select the **appropriate remedy** for a given breach. The pivotal date is **1 January 1996**: under the **Landlord and Tenant (Covenants) Act 1995** the original tenant of a 'new' lease is **released on lawful assignment**, whereas under an 'old' lease the original tenant remains liable for the **whole term** in privity of contract. You should know the role of the **Authorised Guarantee Agreement (AGA)**, the statutory limits on damages for disrepair (**s.18 Landlord and Tenant Act 1927** and the **Leasehold Property (Repairs) Act 1938**), and that a self-help clause recovers cost as a **debt** rather than damages (**Jervis v Harris**). Questions are single best answer (SBAQs) set in **realistic client scenarios** — apply the rules, do not merely recall them. This is a closed-book assessment.

Study tips

1) Memorise the **three covenant types**: **absolute** (total bar), **qualified** (needs consent), **fully qualified** (needs consent, **not to be unreasonably withheld**). 2) Anchor everything to **1 January 1996** — old lease: original tenant liable for the full term (privity of contract); new lease: original tenant **released on lawful assignment** (LT(C)A 1995). 3) Remember an **AGA guarantees only the immediate assignee**; a guarantee of any later assignee is **void**. 4) For rent: **debt action** (6-year limit, Limitation Act 1980), **forfeiture** (needs a forfeiture/re-entry clause; beware **waiver** by accepting rent), **CRAR** (commercial only, **7 clear days'** notice). 5) For repair: **specific performance** (rare), **damages** capped by **s.18 LTA 1927** and restricted by the **Leasehold Property (Repairs) Act 1938** (28-day counter-notice), but a **self-help clause** recovers **debt** and sidesteps those limits (**Jervis v Harris**).