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Insolvency

Tenant insolvency - general FAQs for landlords

I have been sent the keys to the premises by the tenant’s administrator/liquidator etc. Should I accept them?

Landlords should seek advice before accepting the keys to the property as doing so is likely to amount to a surrender of the lease, ending the entitlement to receive rent from the tenant and resulting in liability for business rates reverting to the landlord.

However, it may be possible to put arrangements into place to allow keys to be retained for marketing, emergency etc. purposes.

I have accepted the keys by way of surrender/forfeited the lease but the tenant’s belongings remain in the premises. What should I do with these?

Landlords will become the involuntary bailee of any of the former tenant’s goods which remain in the premises and responsible for their safe-keeping.

Landlords should secure the goods (arranging insurance where appropriate) and take an inventory of items before seeking further advice as to how to deal with the goods in accordance with their duties. This may require the service of a notice under the Torts (Interference with Goods) Act 1977.

If I am unable to pursue the tenant because of its insolvency, what other options are available for recovering the rent arrears and other sums due under the lease?

This will depend on the particular circumstances of the tenancy.

Landlords may be able to pursue guarantors/previous tenants for outstanding rent and other liabilities under the lease, depending on the terms of the lease and any other related documents, e.g. a Licence to Assign, Authorised Guarantee Agreement. For further information, see Recovering Arrears Owed By Tenants - A Guide

Landlords may also wish to consider whether they can draw down on any rent deposit held in respect of the property.

Will the landlord have to pay business rates for the premises once the tenancy ends?

Once the property is returned to the landlord, empty premises rates relief is generally available where premises are unoccupied for a continuous period of less than 3 months (for retail premises), or six months (for industrial premises), after which the full rates will apply (unless any exemptions can be relied upon).

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