What Can I Do If A Commercial Tenant Stops Paying?

Article summary

• When a commercial tenant stops paying rent, you have several options, but they work differently and can affect each other, so the order in which you use them matters.
• Commercial Rent Arrears Recovery (CRAR) lets you send enforcement agents to seize and sell the tenant’s goods without going to court, but it only covers rent, not service charges or other sums, and you must give the tenant at least seven days’ notice before anyone attends.
• Forfeiture lets you take the premises back by changing the locks, but it ends the tenancy completely, and the tenant can ask the court to be reinstated, which is commonly granted if they pay up quickly.
• Using CRAR and then trying to forfeit for the same unpaid rent is not permitted. Once you start the CRAR process, you have affirmed the lease and the right to forfeit for those arrears is lost.
• Where the tenant has assets worth pursuing, and you want the money rather than the premises back, a court claim is usually the most reliable route.

If your commercial tenant has stopped paying rent, you have two main options:

1. Recover what you are owed and keep the tenancy going, or
2. Bring the tenancy to an end and find someone new.

The rules changed when the Tribunals, Courts and Enforcement Act 2007 came into force in April 2014. Before that, landlords could seize a tenant’s goods under an old common law process called distress, which was widely regarded as clunky and open to abuse. The replacement, known as Commercial Rent Arrears Recovery (CRAR), is more regulated and transparent, but it comes with conditions attached that are worth understanding before you pick up the phone to an enforcement agent.

How CRAR works and what it covers

Under section 72 of the Tribunals, Courts and Enforcement Act 2007, a commercial landlord can instruct certificated enforcement agents to take control of a tenant’s goods and sell them to recover rent without first obtaining a court order. The minimum threshold is seven days’ rent in arrears, and the landlord must give the tenant at least seven clear days’ notice of enforcement before agents attend. CRAR applies only to pure rent, meaning the contractual rent due under the lease. It cannot be used to recover service charges, insurance premiums, or other sums, even where the lease treats them as recoverable alongside rent.

The notice requirement matters in practice. Giving seven days’ notice tells the tenant that enforcement is coming, which gives them time to remove valuable goods from the premises before agents arrive. In situations where there is a genuine risk of this happening, it is possible to apply to the court to reduce the notice period, though this requires swift action and a clear evidential basis. Smalleys’

The notice requirement matters in practice. Giving seven days’ notice tells the tenant enforcement is coming, which gives them time to remove valuable goods before agents arrive. Where there is a genuine risk of this, it is possible to apply to the court to reduce the notice period, but this requires swift action and a clear evidential basis. Smalleys’ commercial property team advises landlords across Nottingham and Nottinghamshire on the full range of rent recovery options.

Ending the lease to recover the premises

Where the lease contains a forfeiture clause, a landlord whose tenant is in arrears can choose to bring the tenancy to an end and retake possession. Forfeiture by peaceable re-entry, which involves physically re-entering and changing the locks outside business hours, is available in commercial premises without a court order, provided the tenant is not in occupation at the time. Where the tenant is present, court proceedings for possession are required.

Forfeiture ends the lease and, with it, the right to pursue the tenant for future rent as a contractual matter. The tenant can apply to the court for relief from forfeiture, which is a discretionary remedy allowing the court to reinstate the tenancy on payment of arrears and costs. Relief is commonly granted in commercial cases where the tenant pays promptly, so forfeiture should not be seen as a guaranteed route to permanent recovery of the premises. Advice from Smalleys’ commercial property acquisition and disposal team is available on the implications of forfeiture for specific lease terms.

Why you can’t use CRAR and forfeiture

A landlord cannot use CRAR and then forfeit for the same arrears. In Brar v Thirunavukkrasu [2019] EWCA Civ 208, the Court of Appeal confirmed that initiating CRAR, including issuing a notice of enforcement, affirms the lease and waives the landlord’s right to forfeit for that specific unpaid rent. Even where CRAR fails to recover anything, the right to forfeit for those arrears is gone. The landlord must wait for a new rental period to fall unpaid before forfeiture becomes available again.

This means the sequence of decisions matters significantly. A landlord who instructs CRAR before considering whether forfeiture might be the better outcome has made a choice that cannot be undone for that rental period. Where the tenant’s financial position looks terminal, or where the landlord would prefer the premises back over recovering a debt, taking advice before instructing enforcement agents is the more prudent course.

When court proceedings are the right route

If your tenant has considerable assets and you want to recover money rather than end the tenancy, a debt claim in the County Court or High Court may be the best option. The court can issue charging orders, attachment of earnings, and third party debt orders. And if the debt is large, a statutory demand followed by winding-up or bankruptcy proceedings is also possible.

Final words

The longer a landlord waits, the more the debt grows and the narrower the options become, particularly if the tenant’s financial position is deteriorating. The right course of action depends on what you actually want from the situation: the money, the premises back, or both if possible. Those objectives point towards different tools, and the sequence in which you use them matters more than most landlords realise. Getting advice before you act, rather than after something has gone wrong, is almost always the better investment.

Frequently asked questions

Can I use CRAR for service charges as well as rent?

No, CRAR applies only to the principal rent due under the lease. Service charges, insurance premiums, and other sums, even where they are expressed as additional rent in the lease, cannot be recovered through the CRAR procedure. Court proceedings are the appropriate route for those sums.

What happens if a tenant applies for relief from forfeiture?

The court has a broad discretion to reinstate the tenancy on terms it considers appropriate, usually requiring the tenant to pay all arrears and costs. In commercial cases, relief is commonly granted where the tenant acts quickly. A landlord who has re-let the premises to a third party by the time the relief application is heard will be in a stronger position to resist it, which is one reason why moving quickly after forfeiture matters.

Does the Commercial Rent (Coronavirus) Act 2022 still apply?

The arbitration process under the Commercial Rent (Coronavirus) Act 2022 closed to new applications in September 2022. Arrears that fell within the protected period and were referred to arbitration may still be subject to awards made under that regime, but for arrears accruing after the protected period, the standard recovery options apply.

How much notice must I give before using CRAR?

At least seven clear days’ written notice of enforcement must be given to the tenant before enforcement agents can attend. The notice must contain prescribed information. Giving notice starts the clock, but agents cannot take action until those seven days have passed and the rent remains unpaid. An application to reduce the notice period is available where there is evidence the tenant may remove goods, but it must be made promptly.

This article is provided for general information only and does not constitute legal advice. It reflects the law of England and Wales as at 23rd April 2026. Specific legal advice should be obtained before acting on anything contained here. Smalleys Solicitors is authorised and regulated by the Solicitors Regulation Authority.