Commercial rent arrears mean a landlord can act to recover the money owed, and the options range from seizing goods under CRAR to forfeiting the lease outright. If your company is behind on commercial rent, the good news is that landlords generally prefer to recover money over recovering an empty unit, which leaves genuine room to negotiate before things escalate.
This article sets out every main landlord remedy, what each one actually means for your business, and the practical steps a director can take. It is written for company directors trying to understand the whole picture before deciding what to do next.
How arrears build and why landlords act quickly
Commercial rent is usually payable quarterly, in advance, on the traditional "quarter days". That structure means a missed payment can create a large arrears figure almost overnight, rather than building slowly like a monthly bill.
Landlords also tend to move faster on commercial leases than residential ones, because commercial tenants have fewer statutory protections. There is no equivalent of the residential courts' discretion to delay, and many commercial remedies do not require a court order at all.
For a tenant already juggling wages, suppliers and HMRC, rent arrears rarely arrive alone. They are often a symptom of a broader cashflow problem, which is worth addressing at the same time — see our guide to a business cashflow crisis for a wider view of taking control.
Commercial rent arrears: landlord remedies at a glance
A commercial landlord facing rent arrears typically has several remedies available, sometimes at the same time. Understanding all of them helps a director judge how urgent the situation really is.
- CRAR (Commercial Rent Arrears Recovery) — instructing enforcement agents to seize and sell goods to recover the debt.
- Forfeiture — ending the lease and taking back the premises, either by peaceable re-entry or court proceedings.
- Rent deposit deduction — drawing down a rent deposit, if one was taken at the start of the lease.
- Debt claim or statutory demand — suing for the arrears as a straightforward debt, or issuing a statutory demand as a step towards winding-up.
- Pursuing a guarantor or former tenant — recovering unpaid rent from anyone who guaranteed the lease or an outgoing tenant under an authorised guarantee agreement.
Landlords rarely use every remedy at once. Most start with whichever route recovers money fastest and preserves the tenancy, because an empty unit earns nothing and costs the landlord business rates.
CRAR: seizing goods for unpaid rent
CRAR — a legal process letting landlords instruct enforcement agents to take and sell goods to recover unpaid rent — is one of the quickest remedies available and does not need a court order. It only applies to purely commercial leases and only to arrears of rent itself, not service charges, insurance or other sums.
Before using CRAR, the landlord must give at least seven clear days' written notice, and the arrears must be above a minimum amount set in law. Enforcement agents can then take goods from the premises and, if the debt is not paid, sell them at auction.
CRAR can move fast once the notice period ends, so it is worth acting the moment a notice arrives rather than waiting to see what happens. Our detailed guide, CRAR explained: Commercial Rent Arrears Recovery, covers the exact notice periods and how enforcement agents operate. Official guidance is also available directly from the government's CRAR guidance.
Forfeiture and losing the lease
Forfeiture is the landlord's right to end the lease early because of the tenant's breach, most commonly non-payment of rent. Where the lease allows it — and most commercial leases do — a landlord can forfeit by peaceable re-entry, simply changing the locks when the premises are empty, or by starting court proceedings.
Losing the lease through forfeiture is usually the outcome directors fear most, because it can mean losing the trading premises with little warning. However, forfeiture is not automatic: landlords must be careful not to waive their right to forfeit, for example by accepting rent after the breach, and tenants can sometimes apply for relief from forfeiture to get the lease back.
This is a legally technical area where timing matters enormously. Our companion article, can my landlord forfeit the lease for arrears?, walks through the process and the tenant's options in more depth.
Rent deposits, guarantees and former tenant liability
Many commercial leases include a rent deposit, held by the landlord and available to cover arrears. If the landlord draws down the deposit, most leases require the tenant to top it back up, which can create a second cashflow pressure on top of the original arrears.
Where a director or a related company gave a personal guarantee for the lease, rent arrears can expose that guarantor personally, separately from the company's own liability. It is worth checking the lease and any guarantee documents carefully to understand exactly who is on the hook.
Directors who assigned a lease to a new tenant when they moved premises should also check whether they signed an authorised guarantee agreement (AGA). Under an AGA, a former tenant can remain liable for the current tenant's arrears if that tenant later defaults, sometimes years after the original assignment.
Negotiating with your landlord: what works
Most landlords would rather agree a workable repayment plan than enforce their remedies, particularly if the tenant is trading and the unit is hard to re-let. Being proactive, rather than waiting for a CRAR notice or forfeiture threat, generally produces a better outcome.
Practical steps that tend to work when a company is behind on commercial rent include:
- Contacting the landlord or their agent before the arrears escalate, rather than after.
- Proposing a realistic repayment schedule, backed by figures the landlord can check.
- Asking about a temporary rent concession or a switch to monthly payments instead of quarterly.
- Being honest about the wider trading position — landlords are often more flexible with a tenant who is candid than one who goes silent.
- Getting any agreed variation confirmed in writing before relying on it.
If a director cannot pay business rent at all in the short term, it is still worth opening a conversation. A partial payment plan, agreed early, is usually better for both sides than silence followed by enforcement.
When rent arrears point to wider insolvency
Rent arrears on their own do not mean a company is insolvent. But when arrears sit alongside HMRC debts, supplier pressure, or an inability to pay other bills as they fall due, they can be a sign that the company has a genuine solvency problem rather than a one-off cashflow gap.
Directors have legal duties that change once a company is, or is likely to become, insolvent — broadly, the focus shifts from shareholders' interests to creditors' interests. Continuing to trade while ignoring mounting arrears, without taking advice, can carry personal risk for directors in some circumstances.
A creditor, including a landlord in some cases, can ultimately petition to wind up a company under the Insolvency Act 1986, and advertised petitions and formal insolvency notices are published in The Gazette. Recognising the wider picture early gives directors far more options than waiting until formal action starts.
How a specialist can help you protect the business
Every set of commercial rent arrears options looks different depending on the lease terms, the wider debts, and whether the business is otherwise viable. A regulated insolvency practitioner or solicitor can review the lease, the landlord's likely next move, and the company's overall position, then set out the realistic paths forward.
That might mean negotiating directly with the landlord, restructuring wider debts, or, in some cases, a formal insolvency process designed to protect the business or achieve the best outcome for everyone involved. The right route depends entirely on the specific facts, which is why a proper review matters more than generic guidance.
Frequently asked questions
Can I negotiate a rent concession with my commercial landlord?
Yes, many landlords will consider a temporary reduction, a payment plan, or a switch to monthly rent if you approach them early with realistic figures. There is no automatic right to a concession, so any agreement needs to be negotiated and confirmed in writing.
Can I sublet part of the premises to help cover the rent?
Possibly, but only if the lease allows subletting and the landlord consents where required. Check the alienation clause in your lease before approaching a subtenant, since unauthorised subletting is itself a breach that could trigger forfeiture.
What happens if I just hand back the keys?
Handing back the keys does not automatically end your liability for the rent unless the landlord accepts the surrender. Without a formal surrender agreement, arrears can keep accruing even after you have left the premises.
Will landlord rent arrears remedies affect my personal finances?
Only if you gave a personal guarantee for the lease or signed an authorised guarantee agreement when assigning it. Otherwise, remedies such as CRAR and forfeiture are generally directed at the company and the premises, not the director personally.
How quickly can a landlord use CRAR after arrears build up?
A landlord must give at least seven clear days' written notice before using CRAR, and the arrears must exceed a minimum threshold set in law. In practice, many landlords act as soon as that notice period allows.
This article is general information, not legal, financial or insolvency advice, and it should not be relied on as a substitute for advice on your company's specific circumstances.
If you would like to talk through your commercial rent arrears options, Harbourfirst can introduce you to a regulated insolvency practitioner or solicitor — start an enquiry.