Managing property: understanding your commercial landlord rights
Commercial Property
UK commercial property prices have struggled amid economic and political turbulence, but investors suggest that they're now a bargain. So whether you’re already an active commercial landlord or considering becoming one, there's good reason to invest – just make sure you know your rights.
Tenant checks
Before leasing a commercial property, you have the right to check that your tenants are in a solid financial state. You can:
- Request copies of their accounts.
- Conduct a company check with Companies House or private sites like DueDil.
- Request references from their previous landlords or other partners like suppliers and clients.
Rent, bills and maintenance
A commercial lease agreement is not only there to seal a tenancy, it also provides a legal basis for the financial and maintenance responsibilities of the tenant. Commercial landlords can use their lease to specify:
- The rent and duration of the tenancy.
- Who is responsible for utilities, rates and other bills.
- Fixtures and fittings that the tenant must maintain.
However, it’s not only tenanted properties for which these issues matter. When a commercial property is empty, landlords are also entitled to business rates relief. Support like this can make a big difference in spells of economic uncertainty.
Commercial Rent Arrear Recovery (CRAR)
If a tenant has missed a payment date specified in their lease, or is in arrears by over a month, you can recoup their unpaid debts under Commercial Rent Arrears Recovery (CRAR) rules.
This must be undertaken by Enforcement Agents. Once appointed, we can obtain permission to recover unpaid rent in as little as 24 hours. After seven days notice of enforcement, Enforcement Agents may enter the property to seize money or assets equivalent to the unpaid rent. The cost of enforcement is borne by the debtor.
Forfeiture of lease
In more extreme circumstances, problem tenants may be forced to forfeit their lease and leave the property. To do this, you’ll need to include a clause in the lease giving you the right to terminate a lease in specific circumstances. With this in place, an Enforcement Agent can obtain a warrant to forfeit and then enter the property to reclaim it the following day. In this case, the cost of forfeiture must be borne by the landlord.
For more information about your rights as a commercial landlord, contact us today.
