Can a landlord forfeit a lease over service charge arrears? £350 or three years, worked

A leaseholder is three quarters behind and the landlord's solicitor suggests a forfeiture letter "to focus the mind". Before anyone writes that sentence, the managing agent needs to know whether the landlord can lawfully rely on forfeiture at all. For small arrears on a long lease of a dwelling in England, often it cannot.

What the law says

Section 167 of the Commonhold and Leasehold Reform Act 2002 says a landlord of a long lease of a dwelling may not exercise a right of re-entry or forfeiture for unpaid rent, service charges or administration charges, alone or added together (the "unpaid amount"), unless the unpaid amount either:

• exceeds the prescribed sum, or
• includes an amount that has been payable for more than the prescribed period.

The section caps the sum at £500, and says that a default charge (an administration charge for failing to pay part of the unpaid amount) is taken out before testing the sum. The 2004 Regulations set the figures: £350 and three years.

Section 168 adds a second gate. A landlord may not serve a section 146 notice, the step that starts forfeiture, until a tribunal has finally determined the breach, the tenant has admitted it, or a court or arbitral tribunal has determined it. Where a determination is the route, the notice cannot be served until 14 days after, counting from the day after the determination.

Five flats, worked

All five are long leases of dwellings in England. The date is 19 October 2026.

Flat 1 is the one that catches people out: "exceeds" means more than £350, and exactly £350.00 is not more. Flat 3 is the other: adding the late charge made the balance look as if it had crossed the line, and the Act takes it out again.

Meeting the sum is not the end

Passing section 167 only removes one bar. For Flat 2, the landlord would still have to get a determination of the breach under section 168 before a section 146 notice. If a tribunal decided on 1 December 2026, the 14 days would begin on 2 December and the notice could not be served before the period ended, so the earliest date on our reading is 16 December 2026. That counting is our reading of the section and should be confirmed by the landlord's solicitor.

For most arrears the sensible route is not forfeiture at all. A reminder, a payment plan or a county court claim is usually proportionate; see a service charge arrears letter template and what a county court claim for arrears costs. If the amount is disputed, the application route is covered in the First-tier Tribunal fee. And a demand that is not valid in the first place cannot create a breach: check it with the service charge demand validity checker.

What to do with the figure

1. Add the unpaid amounts for the flat, then take out any default charges.
2. Compare with £350. Exactly £350 does not pass.
3. Find the oldest item and count whether it was payable more than three years ago.
4. If neither test is met, take forfeiture out of the letter.
5. If one is met, pass it to the landlord's solicitor, because section 168 still applies.

What I did not read

I did not read section 81 of the Housing Act 1996, which also restricts forfeiture for service charges until the amount is agreed or determined, the case law on how "payable" is counted for the period test, or the leasehold reform legislation of 2024 to see whether it changes these sections. The legislation page for section 167 lists pending amendments and I did not read them, so check the current text before relying on this. I did not read any particular lease. The five flats are invented examples and the dates are invented too.

Overlyft builds AI staff who join your block management team and check each arrears account against the £350 and three-year tests, list the oldest unpaid item and flag any late charge to be deducted, then hand the property manager a note to confirm before any letter goes out.

This is general information, not legal advice. Check the legislation and take advice on a particular lease.