Dealing with commercial tenants in rent arrears can be stressful, especially if you’re in desperate need of a rental income. The missing money could be making it difficult for you to keep up with bills and outgoings, and chasing payments is time consuming. Luckily, there are a range of things that you can do to ensure your tenant pays.
Direct Negotiation
One of the first things you should do if you have a commercial tenant in rent arrears is to open up a direct line of communication. Speak to them about the rent arrears and try to understand why they have fallen behind with regular payments. If you can, negotiate an affordable payment plan, and consider accepting smaller and more manageable payments to help them catch up. A tenant in rent arrears might find it easier to keep up with payments if there’s some flexibility about how much they need to pay and when.
Demand Letters
If your negotiation efforts are unsuccessful, it’s time to move onto sending demand letters. Send your commercial tenant a formal request for payment and outline the consequences of non-payment. Clearly state how much they owe, when you expect to receive the money and the various ways for them to pay. Highlight what will happen if they don’t pay. Sometimes this is enough to encourage them to make a prompt payment, especially if they are worried about legal repercussions and fines.
Explore Tenant’s Financials
A lot of people don’t realise that you can request evidence from a commercial tenant, to give you a look into their financials and any problems they might be facing. It’s a lot easier to understand rent arrears if you know why a tenant is struggling to pay. Exploring their financials will help you to offer viable solutions that are likely to work for them, whilst also ensuring that you recover the rent owed. Of course, these solutions should be offered within reason, and only to tenants who are willing and able to make payments in some form.
Consider Mediation
If you are struggling to come to an agreement with your commercial tenant in rent arrears, consider mediation. Mediation is a structured and formal process, focused on finding a solution that works for both parties. Using a neutral third party, mediation will help you to reach a compromise that you and your tenant agree on. This could mean your tenant agrees to pay in smaller instalments or they agree to terminate their lease immediately, enabling you to find a new commercial tenant. There are a lot of ways to handle rent arrears in mediation and the process can be tailored to you.
Legal Options
If all other methods of rent collection have failed, you might need to involve the law. Our commercial rent arrears recovery service will help you to recover the money that your tenant owes. We use a range of techniques to track down your debtor and ensure they repay what is rightfully yours. If things have gone too far and want your tenant to move out, eviction might be the best option.
To find out more about how to deal with commercial tenants in rent arrears, speak to our knowledgeable team.
