Jagdeep Sandher, Head of Dispute Resolutions at Blythe Liggins in Leamington
A Leamington Spa law firm has shed light on the post-Covid-19 remedies at a commercial landlord’s disposal to help with rectifying breaches of commercial leases and recovery of rent arrears from tenants.
Rights to recover rent and other sums had been restricted by government legislation as part of its response to the pandemic, all of which came to an end in March this year.
Jagdeep Sandher, Head of Dispute Resolution at Rugby Road-based Blythe Liggins said landlords must be aware of their legal options to recover rent in the wake of restrictions lifting, particularly when tenants have not been impacted by the pandemic.
He said: “If there is a suspicion that a tenant has not been impacted by the pandemic but is still not paying their rent, it is the responsibility of the landlord to evidence this. This can be tricky if it’s not an industry that’s done well during lockdown, such as online retailers and takeaways.
“Most commercial leases today provide landlords with a right to re-enter the property, change the locks and terminate the lease if rent has not been paid.
“This process is called forfeiture and if exercised, landlords will have brought the lease to an end and the tenant will be excluded from the premises. It is crucial landlords consider the rules in light of the now-mandatory arbitration process which came into effect for rent arrears caused by the pandemic.
“Tenants can seek relief from forfeiture through the courts, but this would require the tenant to pay the arrears and the landlord’s costs.”
Jagdeep said there are several other options to consider before going down this path.
“If the landlord doesn’t want to forfeit the lease, they can look into issuing debt recovery proceedings by seeking a judgement against the tenant. If you issued these before November 10, 2021 most claims can continue, but any claims issued after this date are subject to a moratorium” he added.
“Rent deposit deed drawdown is a viable alternative to this. Most tenants are required to provide a certain amount of deposit to their landlords at the start of a lease, which can be used by the landlord, within reason, when required.
“This will depend on the terms of the deed, which will determine whether there are any limitations, but it is a worthy option to consider.”
Commercial Rent Arrears Recovery (CRAR) is another option Jagdeep said is still available to landlords, but only in respect of rent arrears from before the pandemic or after March 25, 2022.
He added: “CRAR allows a landlord to instruct an enforcement agent to take control of a tenant’s goods and sell them to recover an equivalent value to any rent arrears.
“However, this can only be used in respect of principal rent and must not be used to recover service charges, insurance rent, or other sums due under the lease.”
Jagdeep concluded: “At Blythe Liggins, we strongly believe that it is the job of professionals to help guide landlords through the various steps they can take to recover outstanding payments, whilst also being mindful of the need to support businesses through challenging times.
“Perhaps now more than ever, landlords are in need of experienced, independent advice on how best to ensure they are not left out of pocket and we are passionate about helping as many as we can in the region.”
For more information on Blythe Liggins, visit: www.blytheliggins.co.uk.
