Person holding and reviewing documents while sitting at desk with laptop and calculator

When a commercial tenant falls behind on rent, it can place landlords in a difficult position. Fortunately, the law in England and Wales gives landlords several options to recover arrears or take back control of their property.

Below, we outline the main routes available, along with the advantages and risks of each.

Key Considerations Before Taking Action

Before pursuing any remedy, landlords should consider:

What do you want to achieve?

Do you want to recover the arrears and maintain the tenancy, or do you want possession of the property back?

How solvent is the tenant?

If the tenant is genuinely insolvent, some remedies may be ineffective or push them into formal insolvency proceedings.

Are there other breaches?

If the tenant has breached other lease terms, forfeiture may resolve multiple issues at once.

Is this a one-off or persistent problem?

A tenant with a good payment history may deserve a different approach than one with persistent arrears.

What does your lease say?

The terms of your lease will determine which remedies are available to you.

Taking the wrong approach can expose you to claims or waive your rights to other remedies, so legal advice is strongly recommended.

1. Drawing Down on a Rent Deposit

If your tenant paid a rent deposit when the lease was granted, you may be able to use this to cover arrears.

When it applies:

The terms of your Rent Deposit Deed will determine when and how you can draw down.

How it works:

Most deeds allow landlords to withdraw funds after giving notice to the tenant, who may then be required to top up the deposit.

Pros and Cons:

  • Provides immediate access to a secure source of funds.
  • May be worth preserving if the tenant’s long-term solvency is uncertain and other remedies are available.

2. Commercial Rent Arrears Recovery (CRAR)

What it is:

CRAR allows landlords of purely commercial premises to recover unpaid rent by instructing a certificated enforcement agent (bailiff) to seize and sell the tenant’s goods.

When it applies:

  • At least 7 days’ rent must be overdue.
  • CRAR can only be used for rent (not service charge, insurance or other sums unless the lease defines them as rent).
  • The tenant must still be in occupation.

How it works:

A landlord serves a 7-day enforcement notice. If the arrears remain unpaid, an enforcement agent may enter the premises and seize goods to cover the debt.

Pros and Cons:

  • Quick and effective at prompting payment.
  • Limited to rent arrears and can only be used while the tenant remains in place. Some goods cannot be taken, and tenants may remove belongings once notice is given.
  • Using CRAR waives your right to forfeit for the same arrears.

3. Forfeiture of the Lease

What it is:

Forfeiture allows a landlord to end the lease and regain possession of the property if the tenant has breached its terms.

When it applies:

  • The lease must contain a forfeiture clause.
  • For rent arrears, many leases permit forfeiture without prior notice.
  • For other breaches (e.g. failure to repair), a Section 146 notice must usually be served first.

How it works:

  • The landlord may peaceably re-enter the property (for example, by changing the locks when unoccupied).
  • Alternatively, possession can be sought through the courts.

Points to note:

  • Forfeiture must be exercised peaceably.
  • Landlords should avoid “waiving” their right to forfeit by accepting or demanding rent after a breach.
  • Tenants can apply to court for relief from forfeiture if they remedy the breach, so this route may not always bring a permanent end.

4. Pursuing a Guarantor or Former Tenant

If the lease is guaranteed or there is a former tenant with continuing liability, you may be able to pursue them for the arrears.

When it applies:

  • The lease must have a guarantor or an Authorised Guarantee Agreement in place.
  • For leases granted before 1 January 1996, former tenants may remain liable.

How it works:

You may need to serve formal notices under the Landlord and Tenant (Covenants) Act 1995 to recover from former tenants.

Points to note:

  • Provides an additional source of recovery if the current tenant cannot pay.
  • Guarantors may have been released if lease variations were made without their consent.

5. Statutory Demands and Insolvency Action

what is it:

A statutory demand is a formal warning that, if ignored, can lead to bankruptcy (for individuals) or winding-up proceedings (for companies).

When it applies:

  • Debt must be at least £750 for a company or £5,000 for an individual.
  • The debt must be undisputed.

How it works:

  • The statutory demand gives the tenant 21 days to pay.
  • If they do not, the landlord may petition for insolvency proceedings.

why use it:

  • The threat of insolvency is often enough to encourage payment or a repayment plan.
  • It is a relatively quick and inexpensive process, but only effective where the tenant has the means to pay.

Choosing the Right Option

The best approach depends on your circumstances:

  • Want to recover arrears quickly? CRAR can be effective if rent alone is overdue.
  • Want the property back? Forfeiture may be the better route, provided the lease allows it.
  • Tenant refusing to pay a significant, undisputed debt? A statutory demand or insolvency proceedings could apply pressure.
  • Want to preserve the tenancy? Consider drawing down on deposits or pursuing guarantors first.

Because each case turns on the terms of the lease and the tenant’s financial situation, landlords should seek legal advice before acting. Wrongly exercising a remedy could expose you to claims of unlawful eviction or damages.

Frequently Asked Questions

No. CRAR can only be used while the tenant is still in occupation. If they have vacated, you may need to consider forfeiture or court proceedings instead.

Accepting rent after becoming aware of a breach may waive your right to forfeit for that particular breach. You should seek advice before accepting any payments if you are considering forfeiture.

No. CRAR can only be used to recover principal rent (and VAT or interest on that rent). Service charges, insurance premiums and other sums must be recovered through court proceedings, even if your lease reserves them as “rent”.

Peaceable re-entry can be immediate if done correctly. Court proceedings for forfeiture typically take several months. However, tenants can apply for relief from forfeiture, which may extend the process.

If a tenant enters administration, your options are restricted. Forfeiture requires the administrator’s consent or court permission, and CRAR may not be available. Seek urgent legal advice in these circumstances.

How Franklins Solicitors Can Help

At Franklins, our Dispute Resolution team regularly advises commercial landlords on recovering rent arrears and enforcing their rights. We can:

  • Review your lease to confirm which options are open to you.
  • Prepare and serve enforcement notices correctly.
  • Act for you in forfeiture, CRAR or insolvency proceedings.

If your tenant has fallen into arrears and you want to protect your position, contact our team today for clear and practical advice.

Disclaimer: The information provided on this blog is for general informational purposes only and is accurate as of the date of publication. It should not be construed as legal advice. Laws and regulations may change and the content may not reflect the most current legal developments. We recommend consulting with a qualified solicitor for specific legal guidance tailored to your situation.

Written by George Smith
Head of Litigation and Dispute Resolution, Dispute Resolution at Franklins Solicitors LLP

Specialises in contentious trusts and probate, landlord and tenant matters, debt recovery, contract disputes, Court of Protection, lease extensions, injunctions, guarantor advice and boundary disputes.

George Smith is a Chartered Legal Executive and Commissioner of Oaths with over 29 years’ experience in civil and commercial litigation and dispute resolution. He originally joined Franklins Solicitors in 1994, rejoining in 2023 after a 20-year break.

George handles a broad range of matters including contentious trusts and probate, landlord and tenant disputes, debt recovery, defamation, contract disputes and Court of Protection issues. Known for his no-nonsense, calm approach, he focuses on delivering swift and effective solutions to complex disputes.

Outside work, George enjoys backgammon, reading books, attending concerts, travelling and sharing his passion for the 1980s with his four children.

Table of contents
Ready to speak to our Litigation Law team?

Contact us to arrange your initial appointment.

01908 828282
01908 660966
[email protected]

Explore Articles