Access to premises in tenant insolvency A landlord’s right to access the tenant’s premises is governed by the terms of the lease.  Any notice requirements must be adhered to, irrespective of any insolvency process the tenant is subject toBefore seeking access landlords should consider whether they want to immediately determine the lease to avoid losing any right to forfeit  Landlords often require access to premises of an insolvent tenant for health and safety and insurance purposes. They may also want to market the premises (without immediately taking back possession) to limit any lossNotice requiring access for health and safety and insurance purposes can usually be made based on the landlord’s contractual rights Land­lords can use keys it is holding or request these to access the premises making it clear in either case that it is or will hold the keys to the tenant’s order and is treating the lease as continuingThe landlord can inform the tenant’s insolvency practitioner (IP) that it will change the locks and then hold the new keys to the tenant’s order if the IP does not respondKeys must be held and used strictly for the bases set out in the lease or under any express agreement reached with the IP Possession of premises Different types of tenant insolvency will commonly trigger a right to forfeit the lease subject to the precise terms of the leaseTo preserve a right to forfeit while the landlord considers its options, a rent stop should be imposed immediately and no action taken to treat the lease as continuing, discussions with the tenant or the IP about the leaseIf the landlord does want to pursue forfeiture, notice under section 146 Law of Property Act 1925 will need to be served unless the landlord also has an existing right to forfeit for non-payment of rent Possession - administration In administration there is a moratorium on forfeiture without (a) the ad­min­is­trat­ors’ consent; or (b) leave of the courtIf administrators do not require the property for the purposes of the administration, it is very likely that they will grant consentIf administrators refuse consent to forfeit, the landlord can apply to court for per­mis­sion­Ad­min­is­trat­ors may be prepared to accept a surrender of the lease on agreed terms; this should be discussed on a without prejudice basis if forfeiture is also being pursuedA surrender can be effected by (a) formal deed; or (b) operation of lawA surrender by operation of law can be straightforward, quick and relatively cheap, subject to dealing with any outstanding charges affecting the property which the surrender could be otherwise subject to Possession - liquidation In a compulsory liquidation, forfeiture by proceedings can only be pursued with the liquidator’s consent or permission of the courtForfeiture can be carried out by peaceable re-entry, but may be subject to challengeIn a voluntary liquidation, the landlord can forfeit by proceedings or peaceable re-entry unless a cred­it­or/li­quid­at­or/con­trib­ut­ory has applied to court for an order to restrainA liquidator can disclaim onerous contracts including a lease. Disclaimer will end the tenant company’s rights and liabilities under the lease and, if there is no other party liable, will determine the leaseThe landlord will have a claim for its loss resulting from disclaimer in the li­quid­a­tion­Land­lords can serve notice requiring a liquidator to elect within 28 days whether or not to disclaim the lease, or otherwise lose the right to do soThe rights and liabilities of any third parties, such as guarantors, former tenants and sub-tenants are unaffected by a dis­claim­er­Provid­ing a sub-tenant complies with the liabilities under the insolvent tenant’s head lease, the landlord cannot take possession, but has no direct contractual relationship with the sub-tenantThe landlord, sub-tenants and third parties with a relevant interest in the property can apply to court for a vesting orderAgreeing a surrender of the lease is also an option if the tenant is in liquidation Possession - company voluntary arrangement (“CVA”) and restructuring plans (“Plan”) Forfeiture of a lease cannot be prohibited by the terms of a CVA or a Plan  However, the terms of the CVA/Plan varying the contractual terms of the lease may mean that there are no breaches of the tenant’s covenants as variedIn consideration of the compromises imposed on landlords, the CVA/Plan will grant impaired landlords an option to recover possession of the premises by serving a notice to vacateThe terms of the lease as varied by the CVA/Plan will therefore govern how (if at all) the lease may be terminated early 

Over recent years, unfortunately, struggling tenants entering administration is commonplace and with challenging economic times ahead, this is likely to continue to be the case.A common scenario when a tenant enters administration is for administrators to attempt to surrender the lease. Why? Administrators, unlike liquidators, don’t have the power to disclaim a lease so unless there is a break, the only route to bring liabilities to an end is via surrender. What does a surrender mean for landlords and rates liability? Not only does a surrender result in the end of tenant’s liability to the landlord for rent, service charge etc but the tenant’s liability to third parties such as utility providers and rating authorities. We all know that rates can form a significant chunk of a tenant’s outgoings and, if a lease is surrendered, that liability will fall to the landlord unless an incoming tenant or occupier can be found. If commercial property is unoccupied then the landlord will be responsible for paying rates (subject to any empty rates relief). Landlords and their agents should exercise caution to avoid a surrender inadvertently taking place (it can be implied and doesn't need to be by way of a formal deed). An implied surrender can take place by circumstance. For example;An administrator is appointed and simply sends keys to a landlord or agent by post. The acceptance of those keys could amount to a surrender of the lease. The tenant is in administration but the premises are empty, the landlord wants to inspect and remarket so decides to do so – without the consent of the administrator, this could result in a surrender being implied. The good news is that an implied surrender can be relatively easily avoided by taking protective steps or using protective wording when corresponding with the tenant or its administrators. For more information around access, read our see our recent article on accessing the premises in these situations.  Rates mitigation schemes - What are they? There a number of rates mitigation schemes used by landlords. The most common is for Landlords to lease property to a third party typically for low or nominal rent. That third party will then be in rateable occupation of the property in question and the liability will no longer fall to the landlord. Rates Mitigation – A cautionary snail? There have been a number of recent decisions involving rates mit­ig­a­tion schemes and which perhaps demonstrate a more robust approach being taken by both rating authorities and courts to the schemes. One of those cases is Isle Investments Limited v. Leeds City Council, a 2021 decision involving a snail farm business in a Leeds office building. The court found in favour of the rating authority that the lease was no more than a sham, that there was no intention to comply with the lease arrangements by either the landlord or the tenant and that the landlord was liable for the rates. Factors that led to that decision included:the director of the landlord company admitting that the tenant was not expected to occupy;the offices were simply not suitable for snail farming and;no snail farming (or any occupation) took place!It is important to note that, as recognised by the court, entering into a lease to avoid rates won’t automatically mean the arrangement is a sham and liability falls to the landlord but if the true nature of the arrangement doesn’t match with the lease then it could be set aside for rates liability purposes. The facts in the Isle case are perhaps unusual and relatively rare but nonetheless it perhaps indicates a greater readiness on the part of rating authorities to clamp down on sham arrangements and is a useful reminder to landlords implementing mitigation schemes that they should carefully consider the arrangements they are putting in place.