How To Undertake Commercial Rent Recovery

How To Undertake Commercial Rent Recovery

Are you a landlord needing to undertake commercial rent recovery upon one of your tenants failing to pay?

If you own commercial premises that you rent out, it is only right that you are paid on time, every time.

Thankfully, there are solutions available to help prevent landlords from ending up in situations like this.

Federal Management has specific expertise in helping commercial landlords recover rent arrears from tenants refusing to pay.

In this commercial rent recovery guide, our specialists have outlined advice on how to successfully get paid.

Why Might You Need Commercial Rent Recovery?

In recent years, it has become more common for businesses to rent their office spaces instead of buying outright.

The decision to rent a commercial property is mostly based on the size, type and budget of the business.

However, renting has quickly become the best method of obtaining a space for businesses to grow.

There are many benefits to this, including varied property types, reduced costs, flexibility, etc.

Smaller businesses, in particular, may find that renting a property is more affordable than buying a building in full.

They may not be able to accurately predict monthly revenue, meaning renting is more beneficial.

This also allows businesses to better plan their finances if it knows how much the monthly payment of rent is.

When a commercial building is rented out to a company, both the landlords and tenants sign an agreement outlining their obligations.

This contains details regarding payment, forfeiture, service charges and any other terms and conditions.

Despite the positive nature for those renting the properties, some landlords experience the opposite.

As rent has increased, due to the economy, this has led to more and more businesses falling behind on payments.

This is especially true, following the coronavirus pandemic, which saw many firms having to close down.

Whilst financial difficulties may sometimes result in late payments of rent, some will simply refuse to pay.

The commercial lease that is signed is based on trust, which can be disappointing when outstanding rent payments become overdue.

When a business fails to pay commercial rent, this is classed as a “priority debt”. This means that if this is not recovered, it will result in serious repercussions for the landlord.

After all, a landlord still needs to get paid to make payments towards their financial responsibilities.

When landlords are not paid, they may be unaware of the options available to them for commercial rent recovery.

Options for Commercial Rent Recovery

If you are in a situation where your tenants are failing to pay rent on time, you may feel like you have no place to turn.

It is very normal to feel this way, however, there are many options available for commercial rent recovery.

There are two routes that one can go down, which are either terminating the lease (forfeiture) or attempting to collect the rent debt.

You may wish to try and recover the debt by yourself through means of chasing the tenant and sending payment reminders or statutory demands.

Some landlords have been known to use winding-up petitions, but these are not always the most effective method.

An effective option for recovering the overdue amounts is by carrying out Commercial Rent Arrears Recovery (CRAR).

Commercial Rent Arrears Recovery (CRAR) – What Is It?

Commercial Rent Arrears Recovery (CRAR) was introduced in April 2014, following the common law remedy of distress coming to an end.

The act allows commercial landlords to take control of goods from the tenant and sell them to cover the outstanding rent arrears.

There are conditions to this, in that an enforcement notice must be served to the tenant with 7 days notice before this can be carried out.

If a payment hasn’t been received within 7 days, the landlord and enforcement agents can then enter the property.

Although there are some restrictions in some circumstances, this has been viewed as a quick and easy option to collect unpaid rent.

Suspension to Commercial Rent Arrears Recovery

Whilst this has been a popular option for many landlords, it was suspended by the government in March 2020.

The reason for the suspension was to encourage the resolution of disputes through the process of binding arbitration.

This was extended to March 2022 in June 2021, and as of 31 March 2022, these suspensions have now been lifted.

As a result of the suspensions, many commercial landlords resorted to using debt collection agencies.

The use of such agencies has quickly become the most effective way to undertake commercial rent recovery.

Instruct a Debt Collector for Commercial Rent Recovery

It is no secret that dealing with a commercial tenant that has failed to pay rent is a stressful situation for anyone to be in.

No commercial landlord should ever feel the need to write off the rent arrears that are owed, regardless of how difficult this may be.

Although there are many options available to collect this, such as CRAR, there is a far greater solution to help you get paid.

Using a debt collection agency with dedicated expertise in recovering unpaid rent arrears is the most beneficial option for landlords.

Federal Management is renowned for being the leading business debt collection agency in the UK.

Since 2004, our debt recovery experts have assisted a large number of commercial landlords in getting back what they are owed.

Our long history has allowed us to build the best knowledge on how to efficiently and proactively collect commercial rent arrears.

The success rates we provide to our clients are unrivalled, giving you the best chance of recovery. This is complemented by our low commission rates, providing an affordable solution.

If you are a commercial landlord that has a business tenant not paying rent on time, we can help.

Get in contact with our friendly advisors today for FREE commercial rent recovery guidance.

Commercial Rent Recovery Frequently Asked Questions

I have a commercial tenant not paying rent, what should I do?

The first thing you should do when commercial rent goes unpaid is to speak to your tenants to remind them of the payment. If this fails to produce a reaction, you should look at other options.

What are my options for Commercial Rent Recovery?

You can try to recover the rent yourself, go through the process of Commercial Rent Arrears Recovery or use a professional debt collector.

What is the best method for collecting unpaid rent arrears?

Using a debt collection agency, such as Federal Management, is the best option for commercial landlords. In terms of cost, success and effectiveness, this is the option that will benefit you the most.

How much will it cost to use a debt recovery agency?

We pride ourselves on providing an affordable service for our clients, meaning you will not have to spend a lot of money to recover what is owed.

What are Federal Management’s success rates?

Our high calibre service produces unrivalled success rates of, on average, 90% and above on all undisputed debts.

Posted on April 1, 2022