Tenancy Management

The most common reason for evicting a tenant under a commercial lease agreement is for the non-payment of rent, however, forfeiture may be allowed for other reasons such as a breach of the terms of a lease, abandonment or any form of insolvency.

If a commercial tenant has not paid their rent within a certain timeframe, and you have a valid forfeiture clause in the tenancy agreement, you can evict the commercial tenant, either by peaceable re-entry where you can provide a notice of repossession and repossess the property after seven days or by serving a section 146 notice to rectify the breach.

In some instances, where the tenant does not dispute a landlord’s decision, it can take up to 6 weeks, however, if you need to go to court and involve bailiffs, this may take between 8-12 months.

A commercial landlord’s responsibilities regarding property repairs are typically outlined in the lease agreement, but generally include maintaining the structural integrity of the property, such as the roof, walls, and foundations, as well as ensuring compliance with health and safety regulations. Landlords are usually responsible for major repairs to common areas, external parts of the building, and ensuring essential services like heating, water, and electricity are operational.

Commercial landlords can effectively manage rent arrears by exercising the following options;

Forfeiture, the landlord’s right to terminate the lease if the tenant is in breach of any of its covenants.

Commercial Rent Arrears Recovery (CRAR), providing the ability to instruct an enforcement agent to take control of a tenant’s goods and sell them in order to recover the value of the rent arrears.

Drawing down on a rent deposit, notice must be provided that this is being taken and the tenant will be required to replenish the funds that have been used from the deposit account.

Pursue a guarantor, depending on the provisions contained within the lease and the guarantee given by the guarantor, the landlord would usually issue court proceedings to enforce the guarantor’s obligations.

Serve a statutory demand, if payment is not made by the tenant within three weeks, the landlord can issue a petition to wind up the tenant’s business, which can often result in the commercial rent arrears being paid quickly.

Commence court proceedings, landlords can issue court proceedings to recover the tenant’s rent arrears, but this is often a last resort as it can be a lengthy and expensive process.

Landlords must comply with the Landlord and Tenant Act 1954 by firstly reviewing the lease agreement to understand the terms regarding notice periods and grounds for eviction.

When terminating a tenancy under the 1954 Act, landlords must serve a Section 25 notice between six and twelve months before the intended termination date and cannot end the tenancy before the lease expires.

Valid grounds for opposing a lease renewal include tenant breaches, persistent rent delays, or redevelopment plans.

The notice must be delivered to the tenant according to the lease’s terms and statutory requirements, usually in writing and via registered or recorded delivery. If the tenant does not vacate by the notice date, the landlord may need to apply for a possession order from the court, which could involve a hearing if the tenant contests the eviction.

A disrepair claim can be defended if the landlord can show that they responded promptly to any suggestion of disrepair and that any necessary works were carried out within a ‘reasonable’ period of time. It is advised to keep detailed records of the property’s condition through pre-tenancy inspections and regular maintenance reports, ensuring that all repairs and maintenance issues are promptly addressed and documented. Additionally, they should keep clear communication with tenants, including written responses to repair requests, and use photographic evidence to support the property’s condition.

The Renters (Reform) Bill 2024 was designed to “bring in a better deal for renters”, including abolishing Section 21 ‘no fault’ evictions, and ending fixed-term tenancies. In the early stages of the new Labour government, we are yet to hear concrete next steps for the Bill, however, the recent Kings Speech from July 2024 confirmed that the government would give “greater rights and protections to people renting their homes, including ending ‘no fault’ evictions and reforming grounds for possession” through this new Renters’ Rights Bill.

Landlords can ensure compliance with commercial tenancy regulations by familiarising themselves with relevant laws such as the Landlord and Tenant Act 1954, which governs lease renewal and termination rights, and the Health and Safety at Work Act 1974, which mandates safe premises for business operations. Additionally, landlords should ensure compliance with the Equality Act 2010 by making reasonable adjustments for disabled tenants.