Is your commercial tenant at least seven days overdue on their rent?
If so, you have options available: send a reminder, contact the tenant and try to come to an agreement or instruct an enforcement company.
Most landlords choose to try and deal with it themselves first, in order to preserve the relationship, understand what’s happening and work something out amicably.
However, this approach can end up costing them thousands. The tenant might agree a payment plan, default on it and build up additional arrears.
The difference between recovering £3,000 and chasing £15,000 comes down to three assessment questions asked at the right moment. Get them wrong and you’re not just delaying recovery. You’re funding your tenant’s cash flow problems whilst your position weakens. Commercial Rent Arrears Recovery (CRAR) could be the solution you need.
The three questions to ask
Before you instruct an enforcement company to carry out Commercial Rent Arrears Recovery (CRAR), you need answers to three specific questions.
These determine whether Commercial Rent Arrears Recovery can proceed.
Do you have a valid written lease in place? CRAR only works with documented lease agreements. No lease, no enforcement.
Is the rent seven days overdue? Under CRAR regulations, rent must be at least 7 days overdue before the process can be started.
Is the company still trading from the property? This can often be the problem if the tenants have stopped trading.
Act while the business is still open
CRAR can only be enforced at the demised premises.
Therefore, if your tenant has moved their business elsewhere, or ceased trading, you cannot use this process.
Landlords frequently miss this opportunity to act. They assume enforcement agents can attend the tenant’s home address or new business location to collect arrears, which we cannot do.
We conduct internet searches before attending any premises, in order to check opening hours, verify trading status, and assess whether the business is operational.
If we attend during the stated opening hours and find that the premises is closed, we’ll do local research to determine when the business last operated, before reporting back to the landlord.
Where the business is permanently closed, you have other options available. You can look to forfeit the lease on the next due rent and / or obtain a County Court Judgement for the arrears.
Act quickly
If you instruct and enforcement company within the first month, it keeps the amount small and manageable.
This advice runs counter to conventional landlord thinking. Surely you should give tenants time, show understanding, avoid being heavy-handed?
However, when tenants owe multiple months, getting back on track becomes exponentially harder. A business struggling to pay one month’s rent whilst covering current obligations can recover. A business owing three months whilst trying to pay the fourth is in crisis.
Every month you delay enforcement makes the debt larger, the tenant’s position weaker and makes it less likely that you’ll recover the full amount.
Why we recommend swift enforcement
Should you contact the tenant before instructing an enforcement company?
Most landlords assume yes. They want to maintain the relationship, understand the situation and show good faith to the tenant.
We recommend instructing enforcement immediately, without entering into too much of a dialogue with the tenant.
This removes the personal element from the discussion and allows someone impartial to negotiate on your behalf.
CRAR is designed to maintain the tenancy relationship – enabling the landlord to receive their rent and the tenant to remain in the property. When our enforcement agents arrive on site, they look to secure payment in full or structure a payment plan that helps the tenant stay in business.
Recent enforcement outcomes demonstrate this approach delivers results. In six cases, tenants paid 50% of the balance upfront, with structured repayment arrangements for the remainder.
This enabled landlords to receive substantial proportions of the arrears immediately, with the rest secured under controlled goods agreements.
The enforcement process creates urgency without damaging relationships. It’s formal action taken through a third party, preserving the possibility of ongoing tenancy, whilst recovering what you’re owed.
Structuring effective payment plans
Not every tenant can pay in full immediately and payment plans are there to be used when necessary. An effective payment plan needs to be affordable for the tenant, whilst enabling them to continue paying new rent on time.
Ideally, the arrears should be cleared before the following month or quarter’s rent becomes due. This creates a clean break between old debt and current obligations, preventing it becoming a long term issue.
If a tenant owing £6,000 in arrears cannot clear that before the next rent payment is due, they’ve got less chance of recovering as they’re simply accumulating more debt. The payment plan then becomes a delay mechanism, rather than a resolution.
This timeframe discipline separates payment plans that work from those that fail. It forces both parties to address the tenant’s financial position early, when options still exist.
Quick action delivers results
CRAR works best when amounts are small and manageable.
This is the foundation of successful recovery.
Small arrears are easier for tenants to address. Manageable debt doesn’t trigger the paralysis that large arrears create.
Quick enforcement catches problems before they become crises.
To find out more about Commercial Rent Arrears Recovery, contact our team on 0113 532 8350 or office@cealimited.co.uk. We action cases within 24 hours of instruction and provide nationwide coverage across England and Wales.