“I can’t afford my commercial rent” – What Should I Do?
Published: 12th July 2023
The current climate means business is difficult for many commercial tenants.
Rising costs across most if not all industries mean budgets are being stretched. This can mean that looming rent payment dates can be stressful for tenants, with some questioning “What shall I do, I can’t afford my rent”.
It may seem obvious, but effective budgeting is fundamental in ensuring that all business costs are covered. A well-made budget will mean you have your targets clearly set out to ensure that rent payments are made on time, employees are paid and suppliers’ invoices are settled.
Honesty and transparency are always the best way forward. Being open with your managing agent and/or landlord in advance on the payment dates provides them with this information. Without doing so, they are going to assume the worst. The majority of landlords and managing agents will be understanding of your scenarios; most will be experiencing similar issues given the current economic climate. This will allow for meaningful discussions to take place to come to a resolution to this issue.
If you do get into arrears with your commercial rent, then a popular solution is the agreement of a payment plan. These are scheduled plans over an agreed period that spread the amount of arrears that are due to be paid in addition to the usual monthly or quarterly rent payments. This allows for more manageable payments to be made to clear the arrears. What this also does is demonstrate that you as a tenant are willing to resolve the arrears situation you may find yourself in.
If arrears are ignored and no meaningful discussions are had, then your lease could be forfeited, which typically neither party want. If landlords have to resort to this, they have to pay the initial costs of doing so along with the associated costs of finding a new tenant. Landlords would much rather have a healthy relationship with you as a tenant and resolve any underlying issues.