One key to running a successful commercial landlord based business is in having good working relationships with your tenant.

Building a good relationship with your commercial tenants can not only reduce the amount of legal headaches that come your way every year, but may even benefit your annual revenue, too.

There is a stereotype of landlords as dispassionate or uninterested in their tenants – particularly due to the reported experiences of many with residential landlords. However, as with any walk of life, there are good and bad landlords and that is equally true in commercial landlordism.

While it is always possible to easily find new, short-term tenants for residential properties, thus reducing the necessity for even having relations at all, commercial landlordism should be all about forging relationships as many leases (as well as the financial benefits) are longer-term.

Landlordism in the UK today

The COVID-19 pandemic has led to many commercial landlords having to reassess their portfolio and relations with tenants as government legislation has hampered their ability to reclaim lost finances or even properties from tenants. As matters start to resume some normalcy, freeing landlords to take legal action again, there has never been a more important time to also reassess how you handle your tenants, too.

The Commercial Tenants Association (CTA) was launched in 2021 to represent commercial tenants – many of whom are unsatisfied by their landlords. However, these issues aren’t just stemming from the financial strain caused by the pandemic and lockdowns; rather, they are longer-standing issues that have been prevalent in UK landlordism for some time. COVID-19 has just served to further expose the weakness of landlord-tenant relations.

Of course, relations with your tenants isn’t exactly the only thing that makes a good commercial landlord. Knowing where to buy a property, finding the right location, knowing the right type of tenants that would be happy with the property for a longer period and consulting the right professionals are all very important aspects, too.

After all, as aforementioned, it’s all about the long-term with commercial landlordism given that an average lease can last between 5-10 years which, again, really does highlight why you need to take a different approach when it comes to commercial landlordism versus residential landlordism.

You should see good tenant relations as the proverbial ‘cherry on top’ of your landlordism. It could be the difference in keeping and losing a good tenant when they are faced with the possibility of moving. There is no guarantee you will get a better or equal tenant so maintaining relations, especially with loyal tenants, is so crucial to solidifying any revenue gains.

How to create a better relationship with your tenant

Experienced commercial landlords are not strangers to being left with no choice but to pursue legal action if a problem occurs with a tenant. However, because this is all we hear about, this is what we come to expect commercial landlordism should look like. As with anything in life, it’s the negativity that is always talked about or highlighted and rarely the positivity.

When was the last time you heard a news story about a commercial landlord and a tenant celebrating 20 years as business partners? The good stories about landlords are almost always never highlighted. This helps create the view that commercial landlords and tenants cannot trust one another.

One of the better ways to push back against this narrative is to go down the road of fostering good relations. It’s rarely mentioned in any commercial landlord guides, with more focus spent on location, legalities and bureaucratic tactics (which are nevertheless important), but landlord-tenant relations can be important in securing your long-term future as a commercial landlord.

This is a factor that should absolutely be taken seriously given the COVID-19 situation displaying how necessary it is for landlords and tenants to be able to work together to resolve a dispute rather than going down more expensive legal avenues.

The relationship process must start with a good, strong lease. Ideally, one that has been tailored specifically to the landlord and the tenant’s liking. Directly involving the tenant in the process can really be key in cementing a good, long-standing relationship as it shows you are open to their needs.

This is important as if a tenant comes into financial difficulty, a relationship will help your tenant feel more comfortable in breaking the news to you and allow you to prepare in advance for any financial setback, as well as work with the tenant to create a payment plan for any debts.

On the contrary, a poor relationship with a tenant will increase the chances that you will suddenly and unexpectedly be staring at a bank account figure sans a month’s rent from one of your properties. Fairly soon afterwards, the legal letters will begin to fly. Which of the two scenarios sounds more preferable – emotionally and financially – to the landlord and the tenant?

But, even before things get that far, it’s also important to perform rigorous vetting of your potential tenant – such as credit checks. If it’s a new business, ask to see the potential tenant’s business plan. If it’s a pre-existing business, ask for any additional business information or expectations on foot traffic. It also helps to know your property so your tenant can get the most out of it.

This also ensures you don’t slot the wrong tenant into the wrong property. If they do not find success at your property, you will soon be left without rent on a location that could be empty for months – as well as the probability of having to enter into commercial dispute resolution, or having to take expensive legal action against your previous tenant.

A collaborative approach can really pay dividends in the future – especially if the tenant is consistently covering their rent every month and offering you good, long-term rent and revenue security. Also, having a collaborative relationship allows everyone to know where they stand. A tenant will know their lease inside-out, as opposed to it being a generic legal paper, thus reducing the chances of miscommunication.

Ensuring you fulfil your end of the deal is important to building these relations, too. Maintenance and safety checks should be performed with regularity and you should always be readily available to your tenants should they have an issue. After all, if your tenant has an issue with the property, that could soon spiral into a financial issue for both of you.

How better relations can benefit commercial landlords

The most obvious benefit is that performing all of the above can lead to better quality tenants who are more likely to keep up their payments and who are more keen to communicate problems instead of letting them fester until they become an expensive legal matter.

A tenant who has good relations with you is more likely to treat the property with respect and care which, of course, ensures that it is kept in the best condition possible should it need to be put on the market at short notice. A property left in poor condition by a tenant will require extra maintenance and repairs which costs money and time.

It can also benefit you in other ways that often aren’t always immediately apparent. As well as providing you with the best possible revenue, a long-standing tenant who sticks around at a property will also bolster the value of the property. Evaluators are always keen to see previous tenants as this will absolutely factor into the value of the property. If you’ve had a long-standing tenant in place, it suggests satisfaction with the property and that it is conducive to delivering profits.

It’s also a great way to snag other quality tenants, too – either for the same property or as an example of your productive landlordism when you are looking to attract a potential tenant for another property in your portfolio. This is especially great if you have multi-property building that can house multiple tenants and allows you to introduce potential tenants to pre-existing, happy tenants who they will be sharing their space with. It’s a great way to close a deal.

This attentiveness also allows you to assuage any possible clashes that may arise from tenants sharing the same space in a building/complex as they may offer similar services to a new tenant. There is almost assuredly going to be no problem if they are both law firms, but there will be a problem if they are both restaurateurs serving a similar cuisine!

And, lastly, it also reduces the chances of commercial landlords having to take legal action against their tenants. As we mentioned before, a collaborative approach to drafting a lease allows for each party’s positions to be clearly delineated, thus reducing the chance of miscommunications arising.

A breakdown in communication between tenant and landlord can spiral into rent arrears, legal action, statutory demands and even winding-up petitions. This is not productive to either party and should be avoided at all costs. But, if it is necessary, it is important to have a good commercial solicitor on your side.

You might also be interested in our Commercial Landlord Guide for those thinking of becoming a new commercial landlord

Put your trust in Foys

Should their be such a breakdown in commercial landlord-tenant relations, it’s important for either party to seek proper legal guidance. Foys’ experienced and dedicated Commercial Property Team has been providing our legal services to commercial landlords and property management companies for over half a century now.

As well as helping you navigate any potential legal action that you are either pursuing or are on the receiving end of, we can also draft excellent, watertight leases. This is something that can be incredibly important down-the-line when it comes to winning any possible legal case. Conversely, we can also help commercial tenants understand their rights when challenged by a landlord as this is an area that the majority of tenants do struggle to understand.

Our skilled team not only have the legal acumen to grasp the complexities of commercial property matters, but they are courteous and understanding of the stress and strain such matters can cause you. We will champion your case and help you reach the best possible outcome.

That’s exactly why we offer new clients a FREE initial consultation so that you can experience the quality of our commercial property solicitors first-hand. This allows you to explore your legal options free-of-charge so that you can make an informed decision on how you want matters to proceed. To book your consultation, simply get in touch with Foys today by giving us a phone on 01302 327136 (or the office nearest you), email us at enquiries@foys.co.uk or complete our Contact Form.

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