Commercial rent arrears recovery

Commercial rent arrears recovery legislation aims to overhaul the ways in which landlords of commercial properties can recover outstanding debts from their tenants.

The commercial rent arrears recovery legislation means that landlords must give their tenants seven days’ notice before taking action. The concern for landlords is that this gives tenants the opportunity to put their high value goods out of reach of the bailiffs. 

A landlord can take the case to court, and request a shorter notice period, if they can present a viable case that the tenants are likely to remove their valuable assets from the property before the commercial rent arrears recovery is exercised. 

Additionally, a tenant can challenge the commercial rent arrears recovery notice, and if they are successful, the landlord may be told that the recovery cannot take place without the permission of the court. 

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There are other potential areas for concern for landlords when it comes to commercial rent arrears recovery, including:

  • Commercial rent arrears recovery is not available to landlords who let premises which include residential premises as part of the same lease. This could include leases of public houses, shops with flats on the upper floors, etc. Landlords should ensure that the residential part of their property has a separate lease wherever possible.
  • The premises must be let under a written lease, so landlords with informal arrangements cannot use commercial rent arrears recovery.
  • The rent arrears must amount to at least seven days’ unpaid rent.
  • Only rent can be recovered in this way; service charges or insurance rent are not covered by commercial rent arrears recovery, even if they are reserved as rent under the lease.
  • Landlords can only seize goods owned by the debtor. Goods used for the tenant’s personal use, or their business/profession, are exempt up to a total value of £1,350.
  • Only goods up to the value of the rent arrears can be seized.
  • At least seven clear days’ notice must be given before any sale of the seized goods takes place, unless the delay would make the goods unsalable or substantially reduce their value.
  • Landlords with sub-tenancies can also give 14 days’ notice to the sub-tenant to instead pay rent to the landlord.

Stephensons commercial litigation team specialise in commercial rent arrears recovery. If you need expert help and advice regarding the recovery of rent arrears, contact Stephensons today. Call us on 0203 816 9303 to speak to a member of our specialist commercial property law team. 

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