Commercial rent arrears: The Pre-action Protocol for Debt Claims
It can be stressful, frustrating and costly when a commercial tenant builds up rent arrears.
If you are a commercial landlord experiencing this issue, before you take your tenant to court, there are a number of actions you need to take first.
Commercial landlords must follow what is known as the Pre-Action Protocol for Debt Claims before starting any legal proceedings. We explain how this works.
Pre-action correspondence
The Pre-Action Protocol for Debt Claims applies when a business, sole trader, or public body seeks payment of a debt from an individual or sole trader. It aims to encourage early communication between a creditor and debtor and to resolve the issue without court proceedings.
In the first instance, landlords should try to recover their tenant’s rent arrears through pre-action correspondence before submitting formal court claims like a Money Claim. This means sending them an official letter detailing the arrears, along with a payment deadline.
Send a formal letter to your tenant, giving them 30 days to pay. In the letter, ensure that you make clear the exact rental arrears, the interest accrued on them and your legal costs.
Agreeing a repayment plan
You could choose to offer your tenant negotiated repayment plans.
If a tenant explains that they are experiencing temporary cash flow issues, for example, and you want them to remain in the property, you could establish a payment plan for them.
Make sure to put the agreement in writing, setting out clear dates in a payment schedule.
However, be aware that accepting negotiated payment terms can detrimentally affect your right to forfeit the lease later on in the process because it is evidence that the rental agreement is continuing.
Issuing a Money Claim
If the methods above have failed, the next step is to issue a Money Claim for the debt.
If you’re a commercial landlord and would like more support with this issue, you can contact our Dispute Resolution Team. Call us now on 0330 221 8855 or email us at disputeresolution@attwaters.co.uk
