How to guard against tenant administrations – DTZ
While it is important to be aware of national and international trends in the property market, it is also vital to be in constant dialogue with your tenants in order to detect early warning signs of a failing tenant, says Liz Steele, associate director, Retail Active Management at DTZ.
Giving advice to landlords on how to guard against tenant administrations, Liz Steele says it may help a tenant suffering early difficulties in meeting quarterly commitments on a leased property if a monthly – or even weekly – payment plan can be put in place instead. “If these are entered into by standing order, then there is instant awareness if a payment is missed,” she adds.
Landlords also have the option of agreeing to negotiate a rent holiday or even a rent-free period, if they become aware from their managing agent that a business is in distress. This could help seasonal businesses in particular, for example those with high sales during the Christmas period and very low volumes at other times of the year.
In addition, landlords can obtain a higher degree of creditor security if payment is made via a bailiff’s protective warrant. “The main aim of this process is not distraint, although the warrant permits this, but instead allows a payment plan via the bailiff, who will provide advice on the status of the tenant and will be able to give guidance on the level of regular payment a specific type of business is likely to afford. The bailiff will re-administer the warrant each quarter to ensure arrears do not fall further behind,” she notes.
