Dealing with Unpaid Commercial Rent

Dealing with Unpaid Commercial Rent

Since the beginning of the Covid-19 pandemic and the subsequent lockdowns…

…there has been a sharp rise in the number of cases of unpaid commercial debt.

The vast majority of businesses in the UK rent commercial property.

A commercial lease is a common way for landlords and tenants to arrange this.

Over the past 18 months, more and more commercial landlords have had issues with the payment of rent.

This has become a very common occurrence, and commercial landlords have lost millions of pounds in unpaid rent.

The government recently announced that the ban on Forfeiture and Commercial Rent Arrears Recovery (CRAR)…

…was going to be extended until at least the 25th of March 2022.

With this development, commercial landlords have been left in an even more stressful position.

Without the ability to evict a tenant that regularly fails to pay, they will only lose money at a rapid rate.

With this in mind, an alternative solution for resolving unpaid commercial rent is desperately needed.

In this article, our debt collection experts explain the current situation for commercial landlords and tenants.

They have also provided information on what the options for commercial rent debt collection are available.

As well as this, they have explained how we can help to recover your unpaid commercial rent.

Late Payment of Commercial Rent – What Happens When a Tenant Fails to Pay?

When a company does not pay its rent the money they owe becomes known as ‘Commercial Rent Arrears’.

Under normal circumstances, commercial landlords need to choose either to terminate the lease or issue instruction for commercial rent arrears recovery.

Forfeiture

Terminating the lease is classed as ‘forfeiture’.

For most commercial property agreements, a written lease is created.

This lease will normally have a section detailing the ‘right of forfeiture’ that the commercial landlord has.

If the tenant has breached the terms of the lease, the landlord can invoke this right.

If this is the case, the landlord can enter the property and recover its possession.

Most cases are carried out without incident.

It is common for bailiffs to perform this action on behalf of commercial landlords.

Commercial Rent Arrears Recovery (CRAR)

As of 2014, commercial landlords have had another option to recoup any losses they may have received from non-paying tenants.

This option is known as Commercial Rent Arrears Recovery (CRAR).

It allows a landlord to seize a tenants goods in order to cover the value of any rent arrears.

If the option to use commercial rent arrears recovery is chosen…

…a notice of enforcement must be given to the tenants 7 days before the action takes place.

CRAR and Forfeiture Suspension Extension Announced

A recent statement made in June 2021 announced that this suspension would be extended until the 25th of March 2022.

This has left many commercial landlords in a difficult position, and an alternative debt recovery solution is urgently required.

When the suspension was introduced in March 2020, the government encouraged commercial landlords to resolve debt issues through negotiation and arbitration.

A method that has a proven history of its effectiveness is instructing a professional debt collection agency.

Recovering Unpaid Commercial Rent – Instructing a Professional Debt Collection Agency

Facing the issue of unpaid commercial rent has always been a stressful situation for landlords.

This has been made even more problematic following the extension of the suspension of commercial rent arrears.

Whilst this suspension covers the most common ways to recover unpaid commercial rent, there are still ways to resolve the problem.

With the right solution, you will be able to resolve a commercial rent debt collection issue quickly and effectively.

A professional debt recovery agency will be able to recover all commercial rent arrears in a prompt and low-cost manner.

Federal Management is one such agency.

Since 2004 we have helped commercial landlords recover millions of pounds worth of unpaid commercial rent.

If a commercial lease was set up with an individual, we can enforce collection at their private residential address.

If the lease was agreed with a company, they are still liable for any commercial rent arrears.

For all debt recovery cases involving unpaid commercial rent, speak to one of our friendly recovery experts today.

We will conduct a free pre-action assessment of your debt.

This will provide you with the information required to make an informed decision on your next course of action.

Posted on June 28, 2021