The landscape for commercial landlords in Scotland continues to shift, as the remaining pandemic-related limits on rent arrears collection are eliminated this month.
Both landlords and tenants have been required to stay current on numerous legal developments during the last two years.
At the outbreak of the pandemic, a variety of measures were enacted that limited landlords’ ability to collect rent arrears from tenants. These limits have been gradually reduced, and landlords will be relieved to learn that any remaining restrictions will be lifted later this month.
What will happen in Scotland once the final restrictions are lifted?
From the end of March 2022, landlords will once again have a full set of recovery tools at their disposal.
Let’s have a quick reminder of the recovery methods most usually utilised by commercial landlords, all of are – or shortly will be – available once again.
Summary of Diligence
Where leases contain the relevant consents and provisions allowing for the identification of the quantities payable, and have been recorded in the Books of Council and Session for preservation and execution, landlords can engage in what is known as summary diligence.
This means that urgent action can be taken to collect debts – without resorting to court – including the following:
- serving a charge for the outstanding payment;
- being able to carry out an arrestment of funds or moveable property owned by the tenant in the hands of third parties (including banks); and
- executing an attachment of goods, equipment or money owned by the tenant.
Court Proceedings for Lease Debt Recovery
Where the lease expressly prohibits summary diligence, landlords may nonetheless initiate court procedures for arrears payment and, once an order for payment is obtained, proceed to enforcement (the methods of which can again include serving a charge for payment or carrying out an arrestment or attachment).
Notably, landlords will now again be permitted to file winding-up petitions against commercial tenants based on unfulfilled statutory requests for arrears.
Irritancy
From 29 March 2022, the notice period to be given to a commercial tenant before a landlord can terminate the commercial lease for non-payment of property rent or other sums will revert from 14 weeks back to the normal 14 days.
This change restores one of the most powerful tools available to landlords, allowing them to take decisive action when tenants fail to meet their obligations.
What about the Commercial Rent (Coronavirus) Bill?
You may have heard a lot about the Commercial Rent (Coronavirus) Bill in recent weeks, which is set to take effect in England and Wales shortly. The Bill, among other things, ring-fences and establishes a mechanism for resolving rent arrears accumulated during the pandemic. To be clear, Scotland is not covered by the Commercial Rent (Coronavirus)
Please do not hesitate to contact our legal team if you require assistance regarding the enforcement actions accessible to business landlords.
Key Considerations for Landlords With Commercial Property Moving Forward
With enforcement powers fully restored, landlords should:
Review all existing leases to check if they include summary diligence clauses.
Act quickly where arrears have built up — the shorter 14-day irritancy period could allow faster action.
Balance commercial relationships — while recovery options exist, negotiation may sometimes preserve valuable tenant relationships.
Seek legal guidance — each case will turn on the wording of the lease and the tenant’s financial position.
How Complete Clarity Solicitors Can Help
Recovering rent arrears can be a sensitive and complex process, particularly as businesses continue to recover from the pandemic. At Complete Clarity Solicitors, our commercial property team advises landlords across Scotland on the full range of recovery options, from summary diligence to irritancy and winding-up petitions. Contact us now to learn more.
