During the Covid 19 restrictions, many commercial property landlords have been hit hard by tenants not being able to or simply choosing not to pay their rent in full. Our in-house Certificated Enforcement Agent, Eoin Hirst, examines the future of commercial rents and how commercial rent arrears can currently be collected.
At the present time, the Government has made it clear to commercial tenants that if they can pay their rent then they should do. However, there are a large number of tenants who are either:
- not paying their commercial rent
- paying the rent late
- not paying the full amount of the rent
The Housing Minister has this week launched a Call for Evidence on commercial rent and coronavirus. The Government is likely to make a decision on how to proceed before the current restrictions end in June.
Support for landlords to collect commercial rent
Until 30th June 2021, the use of lease forfeiture for rent arrears is banned. There are also restrictions on the use of the Commercial Rent Arrears Recovery (CRAR) process. Until 23rd June commercial tenants need to owe at least 457 days rent before a notice of enforcement can be issued or goods taken into control. From 24th to 30th June the figure will be 554 days.
However, there are other ways that commercial landlords can look to collect outstanding rent. This can include:
- Debt recovery process
- County Court Judgment
- Transfer to a High Court Writ and the use of High Court Enforcement
- Recover arrears from a guarantor
- Secure the debt on the tenant’s goods through a written agreement
At CEA Limited, we can work with landlords in all these areas to quickly collect outstanding commercial rent and service charge arrears. We work in accordance with the Code of Practice published by the Government last year. These services are also provided free of charge to landlords, in the same way that a CRAR instruction is. Therefore, you have nothing to lose by using this approach.
Government launches Commercial Rents and Covid-19 Call for Evidence
During the coronavirus lockdown restrictions, many businesses were forced to close or saw a significant disruption in their trading. In order to prevent commercial landlords from evicting tenants for rental arrears during this period, the Government introduced legislation to ban lease forfeitures and restrict the use of the CRAR process.
These measures are currently in place until 30th June 2021. The Government is planning for a carefully managed exit from the restrictions and has launched a call for evidence to support its decision-making.
If there is evidence that landlords and tenants are not taking part in productive discussions, which could threaten jobs and livelihoods, the Government has said that it will intervene further in the situation.
In the call for evidence, the Government sets out six options. These range from allowing the current protections for tenants to end through to more targeted support and having binding adjudications.
The call for evidence is open until 23:59 on 4th May 2021 and can be accessed here.
Act quickly to collect commercial rent arrears
Commercial landlords should take action quickly to begin collecting their arrears from tenants. There is no guarantee as to how the Government will act when the current restrictions end. This could include continuing with the moratorium as is; increasing the amount of rent arrears that are owing before CRAR can be used; or writing off all or part of the debt owed.
To find out more, contact Eoin Hirst or the commercial property team at CEA Limited today on 0113 532 8350 or email office@cealimited.co.uk.
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