For many landlords, the economic downturn has affected rental income from tenants. What are the best ways to recover any outstanding sums and to keep cash flowing?

Options vary depending on the nature of the property and particularly whether it is commercial or residential premises.

For commercial premises, the first option is to sue for the debt in County Court proceedings. Once issued, an application could be made for summary judgment to avoid the matter proceeding to a full trial. These applications can be successful if the money is outstanding and the tenant is still in situ at the time of the hearing. It is difficult to deny that judgment should then be delayed. Enforcement options can then be considered.

Forfeiture is another option but it requires more careful consideration. Preliminary checks of the lease are needed to ensure it is allowed in the circumstances which have arisen. Forfeiture effectively terminates the lease at that point. It ends any covenants to make future payments of rent. Only the tenant can apply to the courts to have the lease resurrected. This is something that the landlord cannot do. The implications arising from forfeiture need careful consideration before any decision is taken.

Distraint also needs prior consideration. It is an alternative to forfeiture. Certificated bailiffs are used to secure and retrieve items of value from inside the property which (once sold) cover the rent arrears. If the property is, for example, a relatively empty warehouse then this procedure is not going to be of any help to you.

For the residential landlord, their options are different. You can still sue for the rent as a debt and obtain judgment from the court.

You can also take steps to evict residential tenants. To attempt to do so without a court order in place breaches criminal law. In order to gain possession of your property you need to apply to your local County Court and, if necessary, use the Court Bailiff. Possession proceedings are usually initiated by section 8 and/or section 21 notices. In due course an application is made the Court. There are various options (such as accelerated possession proceedings) and it is always important to talk it through and decide on the most appropriate way forward.

There are other options available under the insolvency procedures and these will be picked up in a later article.

If you require any further advice or assistance please contact Michael Callaghan or a member of the Litigation team at Wortley Byers on 01277 268362 or mcallaghan@wortleybyers.co.uk.

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