My business can’t afford landlord rent increases

Updated: 26th November 2021

My rent has been increased during COVID-19: What can I do?

In March 2020, the government announced protective measures to prevent commercial tenants from being evicted, and this scheme has now been extended until the end of the year.

This means you have the chance to build up your business a little over a few more months without the threat of eviction. It gives you a valuable financial ‘breathing space,’ and can also help to protect jobs.

But thinking ahead, are there other steps you can take now to mitigate the effects of potential increased rents in the future?

Check your lease

Your landlord must send you written notice of a rent rise, and you should send notice back in writing if you don’t accept the increase. You can then start to negotiate, or instruct a professional to negotiate on your behalf, for a lower amount that both parties can accept.

With so many people now working from home due to coronavirus, commercial landlords may find themselves struggling to find new tenants and might be willing to consider a regular, slightly lower income, especially if you’ve been a good tenant in the past.

Your commercial lease should include details of rent review timescales, how the process should be carried out, when you need to respond, and how any disagreements should be dealt with.

Real Business Rescue can help you negotiate with your commercial landlord, and advise on the best way forward for your business if negotiations are unsuccessful.

Be aware of commercial landlord rights of enforcement

In some circumstances commercial landlords don’t have to seek permission from the court to enforce rent arrears, and under the Commercial Rent Arrears Recovery (CRAR) legislation, can seize goods to the value of the debt from your business premises.

If your premises are used only for business purposes and there’s no residential element, the landlord could use bailiffs to seize some of your business assets, but they must give you seven days’ notice.

Additionally, the landlord could decide to issue a County Court Judgment (CCJ) against you, or even seek to wind up the business and enforce permanent closure following a process of liquidation.

Obtaining additional finance to pay rent increases

If your business can’t afford to pay your landlord’s rent increases, the problem may be solved by obtaining additional funding. This could also help to steer your business away from insolvency and support its general recovery.

Invoice finance and asset finance are just two forms of alternative funding that can help businesses start the process of recovery. Alternative finance is generally more flexible than standard bank lending, and can be tailored to meet your needs.

Is your business insolvent?

It’s possible that your business is insolvent if you can’t pay your bills. Controlling cash flow has been impossible for many businesses during the pandemic, given the trading restrictions and limits on customers that have been in place.

If your business is insolvent, it’s important to cease trading immediately and seek assistance from a licensed insolvency practitioner (IP). If you fail to do so you could be accused of wrongful trading, and potentially become personally liable for some or all of your business’ debts.

Even in insolvency you have options, however, if your business is considered viable for the future by a licensed IP. Company administration, and formal renegotiation of your rent and other debts via a Company Voluntary Arrangement (CVA), are just two potential possibilities.

For more information on what to do if your business can’t afford a rent increase, please contact one of our licensed IPs at Real Business Rescue. We can offer you a free same-day consultation to quickly establish the best way forward – we work from a broad network of offices throughout the UK.

Keith Tully


0800 644 6080
Director Support - Business suffering from Cash-Flow Problems?
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