Eviction processes for commercial tenants occupying a business property differ from those related to residential tenancies, and landlords have varied options and responsibilities whether they wish to end a commercial tenancy early or evict a tenant. So how can you evict a commercial tenant?
In most cases, an eviction occurs because the tenant has failed to pay rent, service charges, or both or has otherwise breached the terms of their tenancy agreement, perhaps by not keeping the property in a reasonable state of repair.
Clearway’s property management team summarises the ways in which commercial tenants are evicted in order to remain fully compliant and adherent to commercial tenant rights.
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Can I evict a commercial tenant?
Yes, it is possible to evict a commercial tenant in the UK. Commercial tenancies are typically governed by a lease agreement, and the rights and procedures for eviction are outlined in the lease and governed by commercial property law.
How to evict a commercial tenant: 5 steps
The specific eviction process may vary depending on the terms of the lease and the circumstances of the eviction. Generally, the steps involved in evicting a commercial tenant in the UK include:
- Review the lease agreement: This is perhaps the most important step as it will determine what can and cannot be done during the eviction process. Examine the terms of the lease to understand the rights and obligations of both parties, including any provisions related to eviction or termination.
- Communicate with the tenant: Initiate discussions with the tenant regarding the issue that necessitates the eviction, such as non-payment of rent, violation of lease terms, or other breaches of the agreement. Attempt to resolve the matter through negotiation or mediation, if possible.
- Serve a notice: If resolving the issue directly with the tenant is not successful, you may need to serve a notice to the tenant formally notifying them of the eviction. The type of notice required depends on the circumstances. For example, if the eviction is due to non-payment of rent, you may need to serve a Section 146 Notice (if not rent related) or a statutory demand.
- Peaceable re-entry or Court proceedings: You may be able to enter the property and change the lock (more on this below). However, if this isn’t possible and the tenant does not vacate the premises or rectify the issues outlined in the eviction notice, you may need to apply to the court for a possession order. The court will assess the case and may issue a possession order if they find the eviction to be justified.
- Enforcement: If the court grants a possession order, you can seek the assistance of bailiffs or enforcement officers to physically remove the tenant from the premises if necessary.
What constitutes a commercial building?
In the context of ownership, commercial property refers to a property that is primarily used for business purposes rather than residential purposes. It includes various types of properties intended for commercial activities, such as:
- Office Buildings: Buildings or complexes specifically designed and equipped for office-based businesses, including professional services, corporate headquarters, and administrative functions.
- Retail Spaces: Properties designed for the sale of goods or services to consumers, such as shopping centres, retail parks, standalone stores, and shops within commercial complexes.
- Industrial Properties: Facilities used for manufacturing, warehousing, distribution, or research and development purposes. These may include factories, warehouses, industrial parks, and specialised facilities like data centres.
- Hospitality and Lodging: Properties that provide accommodation and services to travellers and guests, including hotels, motels, resorts, bed and breakfasts, and hostels.
- Restaurants and Food Establishments: Premises used for food preparation, dining, and serving customers, such as restaurants, cafes, fast food chains, and bars.
- Entertainment Venues: Spaces dedicated to entertainment and leisure activities, such as theatres, cinemas, concert halls, amusement parks, bowling alleys, and sports facilities.
Should a property fall under one of these categories, it’s important to follow protocols in the process of evicting tenants.
What are the reasons for commercial tenant eviction?
There are several reasons a commercial landlord has the right to take back possession of their property. Generally, these reasons fall under ‘breach of covenant.’ A breach of covenant refers to the violation or failure to fulfil one or more terms or obligations outlined in a contractual agreement or legal document, such as a lease, deed, or covenant.
In the context of property law, covenants are legally binding promises or obligations that parties agree to uphold. A breach of covenant occurs when one party fails to meet these agreed-upon obligations. Although non-payment is typical, this may also arise due to:
- Using a rented property for unauthorised or even illegal activities.
- Abandonment, where the tenant has disappeared or left without notice.
- Insolvency if a commercial tenant’s business becomes illiquid.
- Failure to comply with the lease terms.
One of the many possible complications is that the tenancy can only be forfeited or released at will if a forfeiture clause within the lease makes this a viable option.
The most secure option, and in scenarios where there is a dispute between the landlord and tenant or a disagreement about their compliance with the lease terms, may be to apply to the local court for a possession order.
However, this can take several months, and if your lease has the appropriate conditions, you may be able to opt for a peaceable re-entry which is significantly faster, cheaper and more convenient.
Removing a Commercial Tenant Via Peaceable Re-Entry
This process means the landlord and their appointed eviction service or bailiff attend the property and physically enter, changing the locks to prevent the tenant from returning.
There are varied rules and regulations, so it is essential the re-entry is lawful because otherwise, it could be deemed trespassing and give rise to legal liabilities – we always recommend commercial landlords seek independent advice and never attempt a re-entry without a certified bailiff.
In other scenarios, the landlord may wish to serve notice for breach of lease terms unrelated to rental defaults, where the notice period and requirements are set out in the Property Act 1925.
You can read more about peaceable re-entry here.
Restrictions on Commercial Tenant Evictions
A caveat exists where peaceable re-entry is not an option if a proportion of the property is used for residential purposes, such as having an apartment above a shop or if a larger property is let through one tenancy agreement.
Because the tenant protections under residential tenancy agreements vary significantly from those related to commercial tenancies and extend to mixed-use properties, a different process involving a court order is necessary.
The Practicalities of Eviction Through Peaceable Re-Entry
As long as the landlord has served any notice period required and has given the tenant the pre-agreed amount of time to bring their rental arrears into good order, or repair damage caused due to any other non-compliance with the lease terms, the landlord should have grounds to re-enter their property.
Landlords usually must consider the following:
- A tenant must not be expected to be present.
- To re-enter and change the locks when there is no likelihood of violence or conflict.
- Leave a notice in a clear place, usually on the front door, stating that the property has been possessed by peaceable re-entry and that the locks have been changed.
Provided the correct steps are taken, this now means a property is back in the possession of the owner, and the tenant has no lawful right to re-enter. However, this may involve arranging for the tenant to collect any belongings or goods remaining within the property.
Ending Commercial Leases With a Court Order
Where peaceable re-entry is not an option, commercial landlords can also apply for a possession order, which begins with a hearing. From there, the tenant has two weeks to file a defence or apply for forfeiture relief.
The court will decide whether to grant a possession order or postpone proceedings for a fixed period to allow either party to present further information or supporting documentation.
Courts will normally ask to see the following:
- Proof of non-payment.
- Records of contributions or payments made.
- The lease agreement.
- All communications, including phone records.
- A copy of the notice that was given to the tenant.
- Evidence that the tenant received the notice, such as a postage receipt, email, read receipt or post office stamp on a physical letter.
If eligible, commercial tenants can apply for forfeiture relief to give them time to remedy any issues, such as making overdue payments. If relief is granted, the tenant is also responsible for covering the costs of a locksmith and bailiff if the landlord has re-entered the property in the meantime.
It is not possible to evict a tenant if a court has allowed relief from forfeiture, but they are legally bound to bring payments and other affairs up to date to avoid relief being withdrawn.
Timings of Commercial Possession Orders
A landlord with a court-ordered possession order normally needs to allow the tenant 28 days to apply for forfeiture relief or leave the property.
However, this often presents a different series of complications related to repairing and redecorating the property, resolving damage to the premise caused by the evicted tenant, ensuring they have access to collect their belongings left behind, and often marketing the now vacant premise to find a new tenant.
The best way to avoid commercial tenant evictions is to conduct thorough background checks on all prospective business tenants, take swift action when they fall into arrears, and consult professional eviction specialists to ensure any eviction scenario you find yourself in is managed safely, legally and quickly.
Related reading: If you’re a commercial landlord, clearviewBI can help to manage corporate tenants in real-time, analysing and generating enhanced visibility into corporate distress and the potential for rent default. This means you can anticipate problem clients before a breach of covenant occurs. You can read more about clearviewBI here.
If you would like to discuss a commercial tenancy eviction or the next steps to pursue a commercial eviction of a business tenant, please get in touch at your convenience for further information and guidance.