Commercial Rent Recovery In London

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Commercial Rent Recovery In London

In recent years, businesses in London have chosen to rent commercial properties instead of buying them outright.

Renting a commercial property is perceived to be a more affordable way to obtain premises without purchasing in full.

Having a set amount of rent to pay each month can be beneficial to businesses in helping plan finances.

This is especially true for smaller businesses that may not be able to accurately predict monthly turnover.

Businesses that are growing may choose to rent a property with the intention of moving into a bigger office.

Regardless of the reason, renting commercial properties is a relatively straightforward exercise.

The renting procedure is finalised through commercial leases and is to be signed by both landlords and tenants.

The signing of the lease ensures that the commercial tenants know what their obligations are.

It will also detail specifics such as rent payments, service charges, terms and conditions, rights of forfeiture etc.

In relation to commercial premises, it is common for tenants to experience financial issues that result in late payment of rent.

Whilst this is sadly normality, it is something that needs to be acted on if it becomes a recurrence.

If commercial landlords start to suffer from unpaid rent regularly, this is commonly referred to as ‘Commercial Rent Arrears’.

Rent arrears that are left unpaid are classed as ‘priority debts’, which means they can cause serious problems if ignored.

Landlords need to ensure that they recover rent arrears quickly in order to not let it affect cash flow.

It is no secret that cash flow is the lifeblood of any size business and therefore needs to remain stable.

Commonly, landlords may use statutory demands or winding up petitions to try and get the tenant to pay rent.

Although these are both common methods, they are not always effective at producing a payment.

Commercial rent recovery can be done by either terminating the lease or attempting to recover what is owed.

Taking action to undertake commercial rent recovery is done by Commercial Rent Arrears Recovery (CRAR).

What Is Commercial Rent Arrears Recovery (CRAR)?

Commercial Rent Arrears Recovery was introduced in April 2014, following the common law remedy of distress becoming unused.

This allows commercial landlords to take control of goods and sell them to cover the outstanding arrears.

This procedure is perfectly lawful and is in place to help landlords who have struggled with problem tenants.

In order to use CRAR, a notice of enforcement must be issued to the tenant with at least 7 days notice.

The notice is used to tell the tenant of the intention to enter the property and take control of goods.

If no payment is made within the notice period, the commercial landlord is free to enter the property and take what is needed.

Instead of using this method, the landlord may wish to terminate the lease as another resort.

If the decision is made to do this, the act of doing this is known as ‘forfeiture’.

Terminate The Lease

The landlord has a right to terminate the lease if the agreement that was signed in the lease is breached by either party.

If no payment of rent has been made on a regular basis, this is an example of a breach of the contract.

The tenant signed an agreement that states they would pay rent every month, so why have they fallen back on this promise?

Forfeiture only applies if rent is unpaid for a specific period of time and this is outlined in the lease.

A large number of landlords tend to choose this method, as it means they can peaceably enter the property and recover possessions.

High court enforcement agents will often assist with entering the property and changing the locks.

Commercial Rent Arrears Recovery And Forfeiture Suspensions

Although the above methods are popular, in March 2020, the government introduced suspensions to both of them.

The suspension was introduced as a way to encourage landlords to settle commercial rent recovery disputes through the process of binding arbitration.

As a result, this left landlords in a difficult position with no real view of how they could get rent recovered. Further to this, in June 2021, the suspension was sadly extended to 25 March 2022.

It is clear that landlords need a dedicated solution for the recovery of commercial rent recovery.

Thankfully, there is a way for landlords to successfully recover and take control of rent arrears.

Using a professional debt collection agency that has expertise in this field is the way forward.

Debt Collection Agency For Commercial Rent Recovery

If you need require commercial rent recovery, you will benefit from using an expert debt collection agency.

There are hundreds of debt collectors to choose from, however, it is beneficial to use one based locally.

At Debt Collection London, we have helped a large number of commercial landlords find the best agency.

Across our long history, we have put together a list of the most effective agencies in London.

Our partners are industry experts at recovering any size commercial, private and international debt.

Commercial Rent Recovery Debt Collection Agency Recommendations

Our service is designed to provide you or your business with the best agency recommendations.

The partners that we work with are highly efficient and produce average recovery rates of up to 90%.

The agency we recommend for commercial debt collection is Federal Management.

They are authorised and regulated by the Financial Conduct Authority (FCA) to recover debts under the Consumer Credit Act.

If the lease is signed by an individual, you will need to use a private debt collection agency.

We recommend Frontline Collections, which are the UK’s leading agency for individual debt recovery.

Debt Collection London – Frequently Asked Questions