Landlords Watch out


Monitor your tenants!


Given some perceptions that the commercial property market has peaked, the financial uncertainties in America, the high interest rates for inter-bank lending in the UK and the recent “run” on Northern Rock, landlords would be well advised to closely monitor tenants’ lease liabilities falling due on the September quarter day and thereafter.

Consideration should be given to offering “easy” terms to tenants in financial difficulties which could include spreading quarterly rental payments to monthly rental payments.

More generally, why not task RKE Associates to put in place:


· Monitoring of the financial press for indications of tenant companies having financial difficulty


· Regular visits to retail tenants’ premises to check for poor window displays, empty shelves or fewer staff.  Forewarned is forearmed.


If lease payments are not received, landlords should review swiftly the formal remedies available, taking account of the circumstances of the particular tenant, the location of the property and its marketability.  The most appropriate remedy should then be chosen and action taken.

Remedies available include:-


· Distraining on tenant possessions to the value of the rent arrears


· Court proceedings


· Issuing a statutory demand


· Forfeiture of the lease (either by peaceable re-entry or court proceedings)


· Service of a Section 6 notice on sub-tenants


For new lettings, landlords should adopt a greater rigour when checking a prospective tenant’s financial ability to satisfy the lease liabilities.  Where there are concerns, greater consideration should be given to seeking a rental deposit, bank guarantee or surety.

Inactivity by a landlord could result in permanent loss – such as arrears of rent, being left with empty premises (and incurring local authority rates, security costs and repair costs) and no future rent pending finding a new tenant.




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