Commercial Landlords: Pursuing Rent Arrears During a Pandemic

Year Published: 2021

2021 is well underway and landlords are still facing challenges with their commercial tenants due to the impact of the pandemic – the most common problem being tenants not paying their rent.

Currently, there is a moratorium on forfeiture of commercial leases for non-payment of rent. This also applies to all payments to be made by the tenant including service charge, utilities or insurance payments. The moratorium is currently in place until 31st March 2021 and this could be extended by the Government.

Whilst the moratorium is in place, a landlord cannot evict their commercial tenants or take back possession by way of forfeiture for the reason of non-payment of rent.

This does not however mean that rent is not payable. The landlord should make it clear to the tenant that the rent is overdue and that they intend to take steps to recover arrears either by forfeiture when the moratorium comes to an end or by other means.

Alternative Options to Pursue Rent Arrears

The below information is dependent on individual circumstances and what the lease provides, but it is important that landlords are aware that they do not have to wait until the moratorium ends to take action in respect of rent arrears.

The following options should be considered:

  • Has the tenant breached any other aspects of the lease where forfeiture may still be an option?
  • Commercial rent arrears recovery can be used for arrears over 366 days old. This involves instructing an enforcement agent to take control of the tenant’s goods and selling them to recover the debt.
  • Pursue a Guarantor if there is one named within the lease.
  • Rent deposit – if the lease allows, you may be able to draw down on any rent deposit held.
  • You can issue court proceedings to recover the arrears.

The Government continues to encourage parties to communicate and work together to seek a resolution, however in some instances, landlords cannot afford to continue with the situation whilst they have no incoming rent.

If you are unsure of your position and would like further advice on pursuing rent arrears from commercial tenants, please contact Kathryn Clare on 01244 30 5955 or email [email protected].

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