Advice when you cannot pay your commercial landlord

I can’t pay my business landlord – what options do I have?

Renting a shop or office space for your business can cost a lot, and if your money situation isn’t good, it’s easy to get behind on rent. When you can’t pay your landlord, you need to act quickly because they can take legal action to get the money you owe.

There’s a law called Commercial Rent Arrears Recovery (CRAR) that allows landlords to take things from your business place, like stock, if you haven’t paid rent. They can do this without going to court. Even if this law doesn’t apply to your landlord, they might still use a different legal method to make you pay what you owe.

What happens under CRAR legislation?

The landlord may be able to use CRAR legislation if:

• The premises are solely used for business activities, without any mixed or residential use.
• A written lease is in effect.
• Only the main rent amounts, along with VAT and interest, are gathered; additional payments like service charges are not covered by CRAR.
• The lease has not already been forfeited.
• Certified enforcement agents are employed by the landlord to carry out the seizure of goods.

Why commercial rent arrears are so serious

Falling behind on your shop or office rent can seriously put your business at risk of closing down. Because commercial landlords have a lot of authority, your business assets could be taken away in just seven days.

Your landlord has to give you a clear seven days’ notice before enforcement agents come, and an extra seven days’ notice before they take your things. They might sell your stuff at an auction to get back the money you owe, and sometimes, the landlord can even take over your place.

What you need to consider if you can’t pay your business landlord

• Can you manage to pay some money towards the rent you owe? If you can, it shows that you’re not intentionally avoiding payment.
• If your business can’t afford to pay the rent, it might be going through insolvency. You need to figure out if this is happening because it decides what you should do next.
• If the business is insolvent, you should stop trading immediately to protect the people you owe money to. Get advice from a licensed insolvency practitioner, or you might end up increasing losses for those you owe and face accusations of trading improperly.
• Have you agreed to a lease guarantee?

Lease guarantees when you can’t pay your commercial rent

It’s especially worrying if you’ve given a personal guarantee for your business lease because it means your landlord might take you to court personally if your business can’t pay.

If this is happening, get professional advice quickly. But what can you do to stop it from getting to the point where your own money is in danger?

Read More:

• Can’t afford to pay my business rates
• Can’t pay my company’s suppliers
• Can’t pay my staff redundancy pay
• Business can’t pay Customs & Excise fees
• Business is losing money

What can you do to repay your landlord?

I. Restructure your debt:

If you owe money to different people, you might consider rearranging your debt, possibly through something called a Company Voluntary Arrangement (CVA). This stops all legal action from those you owe money to and lets you pay back at a rate you can manage.

II. Alternative finance:
Based on your money situation and the kind of business you have, you might look into other ways of getting funds. This could mean getting a one-time amount of cash or getting regular payments for your day-to-day business needs. Some flexible options for this kind of funding include things like merchant cash advances, invoice factoring and discounting, and asset-based funding. 

III. Company administration

When your business goes into administration, you get eight weeks to figure out and plan what to do next. The administration might finish with a Company Voluntary Arrangement, as mentioned earlier, or starting a new company through pre-pack administration could give the best return for the people you owe money to.

There are many ways to deal with overdue commercial rent, but it’s crucial to get professional advice. Licensed insolvency practitioners will check out your company’s money situation, explain all your options, and tell you about the consequences of each.

Vanguard Insolvency is an expert in rescuing and restructuring, and they can give you reliable independent advice if you can’t pay your business landlord. Call today for a free consultation on the same day – they have offices all around the UK, so you’re not far from professional help wherever you are.