Are you the owner of a commercial property? Experiencing trouble with a tenant? Is your tenant refusing to pay the rent? Do you need to recover possession?

Statistics show that the United Kingdom has the largest commercial real estate market in Europe. As of December 2023, the value of the market was almost 1.4 trillion pounds.[1] At last summer the average commercial rent stood at a substantial £1,036 per week, showing a 9.7% increase compared to the same period the preceding year.[2]

This is all well and good but if you have a troublesome tenant then the market’s strength and strong statistics are irrelevant. Where the rent is not paid, there will be a breach of a lease (or licence) and as a landlord you will be entitled to recover possession.

Even if the rent has been paid there may be other issues such as unauthorised subletting or failure to maintain the property adequately.

Recovering possession is no easy feat and you will need specialist advice: Is the lease made under the Landlord and Tenant Act 1954 and does your tenant have security of tenure? Will you need to serve a section 146 Notice to forfeit the lease? Do you have a right to peaceable re-entry?

Peaceable re-entry can be a useful tool to recover possession quickly, but landlords can place themselves at risk of committing an offence under the Criminal Law Act 1977, and, being the safest route to recover possession, Court proceedings are usually issued.

If the grounds for forfeit relate to something other than unpaid rent, a landlord cannot forfeit a lease by peaceable re-entry or with court proceedings until a Section 146 notice has been served on the tenant. (But, a section 146 notice is not required where the ground for forfeiture is non-payment of rent).

A lease that does not fall under the Landlord and Tenant Act 1954 is referred to as a ‘contracted out’ lease. These tenancies can be terminated on expiry without being renewed, but the individual circumstances of each matter will need to be considered.

Not to confuse you further, but if your tenant is in arrears there is also another suitable enforcement method named CRAR. CRAR, or Commercial Rent Arrears Recovery can be used where there is a written lease and rent arrears of at least 7 days (Note – only rent can be recovered, not interest or VAT).  This method of redress allow landlords to take control of tenants good (using Certified Enforcement Agents) to the value of any unpaid rent. CRAR can be a useful scaremongering tactic although landlords will waive their right to forfeit a lease if they engage it.

In view of the complexities involved in recovering possession of commercial premises clear advice is required from the start.

Our Dispute Resolution team can help you navigate this potential minefield.  Contact us for advice on your situation.

 

 

[1]https://www.statista.com/topics/8071/commercial-real-estate-in-the-united-kingdom/#topicOverview

[2] UK Commercial Rents Bounce Back with a 9.7% Annual Increase, Exceeding Pre-Pandemic Figures (landlordknowledge.co.uk)