Rent recovery outlook for commercial and residential landlords

For two years, Landlords have been subject to restrictions in regard to chasing tenants for unpaid rent. Since the end of March 2022, restrictions have been lifted. So what steps can you, as a Landlord now take to recover rent due to you, or indeed, remove your problem tenants?

The majority of tenants are honest and pay their rent when it’s due. Some, when they get into financial problems, discuss the situation with their landlord in a reasonable manner. The Covid crisis brought landlord / tenant relationships where rent is concerned into sharp focus, and over the past two years Landlords have faced considerable restrictions on how they can pursue an errant tenant over rent or in evicting them.

Where private tenants are concerned, recent figures from the The English Housing Survey 2020-21 suggest that as many as 4% of private renters are behind in their payments. Worst still, debt collection agencies working to recover some of this debt on behalf of landlords report that even though many renters have the means to pay, some have chosen to use Covid as an excuse not to pay.

Choosing not to pay rent and forcing the landlord to take action is not new, but Covid has exacerbated the situation. Tenants can believe that by simply walking away the landlord is powerless. For some this might be true, as the Landlord has to be sure that chasing after an errant tenant is going to be fruitful. This means the Landlord needs to know his tenant and understand their financial position – both from the perspective of income and potential assets that could be claimed against in order to recover what is owed. There’s no point spending hours and potentially thousands of pounds on solicitors, court fees and bailiffs if the debtor has nothing to recover against.

What rent recovery options now exist for a Landlord?

In March 2020, the Government took action to protect tenants – both commercial and private, by restricting Landlords in the actions they could take to recover unpaid rent or evict.

The Coronavirus Act 2020, saw the introduction of several measures including the use of winding up petitions and statutory demands, where corporate tenants were concerned, and a series of measures restricting private landlords evicting their tenants. These have since been lifted, allowing landlords the right to explore all measures available to them.

For commercial landlords, the following options are now possible again:

  • Forfeiture. If a commercial landlord fails to pay rent, they are open to the potential for the landlord to make peaceful entry or the premises and take possession. No court action is required and they can change the locks. A tenant can still challenge this through the courts, provided they pay the arrears and costs of the landlord.Suspension of Forfeiture ended March 25th 2022.
  • Commercial Rent Arrears Recovery (CRAR). This permits a landlord in instructing enforcement agents to seize goods so they may be sold to recover arrears.Restriction of CRAR was lifted on March 25th 2022.
  • Statutory Demand. A solid method for debt collection, whether rent or unpaid invoices. This is the initial step prior to legal action such as a winding-up petition.The ban on Statutory Demands was lifted in October 2021. However, Winding-up petition restrictions interfered with this.
  • Winding-up petitions. A court application to force a debtor into compulsory liquidation. Also used to establish insolvency if the demand has not been met within 21 days of issue.Restrictions were lifted on March 31st 2022.

Check out an earlier post on recovering commercial property rent here.

For private landlords:

Eviction notice periods are now back to pre-pandemic levels. In other words, whatever is set out in your rental agreement.

However, due to the backlog of cases going through the courts caused by the court suspensions, Landlords may now have a bigger task on their hands as tenants may have continued non-payment while court dates are met.

The current economic climate will likely make matters worse for Landlords

energy price increases make rent payments harderThe cost of energy is having a serious impact on families and businesses. In fact, energy companies have warned the government that up to 40% of people in the UK could fall into fuel poverty, especially now that rate caps have been lifted. For some, particularly those who rent their homes, stark choices loom – how to pay for fuel and pay their rent.

Naturally, that leaves private landlords, once again, in a dilemma as to how to handle non-payment of rent. While the Government is trying to offset some of the energy cost increases for the poorest families, it leaves others in limbo and at the mercy of their landlords with rent is concerned.

While the financial matters of tenants are not the principal concern of landlords, Landlords need to be prepared as price caps will increase again in October. This means that some families may see their energy bills double or triple from their original levels. At this point it is too early to speculate what measures the Government will take to protect renters from the financial hardships such price increase will bring, but given what we have experienced with Covid, it’s not too hard to see that Landlords may once again suffer.

Foys Solicitors, helping landlords and tenants resolve disputes

Foys have been assisting commercial landlords and residential landlords in and around Doncaster, Sheffield and Rotherham, resolve their differences for many years.

We understand the pressures both landlords and tenant are under and help parties come to amicable agreements. In circumstances where this isn’t possible, we assist by providing legal support and bring the case to a conclusion through the courts.

Call us today through the local office nearest you to discuss how we may help with your landlord or tenant issue.