Landlords Game Plan
As more tenants face financial pressure, landlords are encountering higher risks of rent arrears and lease defaults. In this month’s newsletter, we share practical ways to protect your investment — from setting up strong lease security to enforcing your rights if a default occurs.
Start Strong: Know Your Tenant and Secure the Lease
A solid lease begins with understanding who your tenant really is. Reviewing the company’s financials or structure helps determine what level of security is needed.
Common protections include:
Bank guarantee: quick to enforce but covers a fixed amount.
Personal or parent guarantee: covers all lease obligations — useful if the guarantor has real assets.
Security deposit: straightforward and easy to apply against arrears.
Security over fit-outs or assets: effective for high-value installations (ensure PPSR registration).
Always make sure the agreed security is actually in place before handing over possession or entering into an agreement to lease.
Spot Issues Early
Don’t get complacent! Timely invoicing and regular rent reviews help you detect problems before they escalate.
If arrears arise:
Start with a friendly reminder, then a formal demand if needed.
Consider short-term solutions such as a rent-deferral plan.
Use default-interest clauses strategically — you can waive interest to encourage prompt payment.
Draw on any bond or guarantee only as a last resort.
When Defaults Escalate
If the breach persists, landlords must follow the Property Law Act 2007 notice process.
Serve a PLA notice giving the tenant at least 10 working days to remedy the default. Incorrect service can invalidate the cancellation, so record proof of delivery carefully.
After the notice period, you can:
Peacefully re-enter during the day (without force), or
Apply to the Court for a possession order if the tenant remains on-site.
Courts can grant relief from cancellation if arrears are paid or the breach is minor, so it pays to act reasonably and keep written evidence of communication.
Recovering Arrears
If cancellation isn’t appropriate, landlords can still pursue recovery through:
Statutory demand (for company tenants) – non-payment within 15 days allows a liquidation application.
Summary judgment – a fast court route for undisputed rent.
Guarantor enforcement – pursue guarantors directly if permitted under the lease.
Mitigation – you must try to re-let the premises to minimise loss.
When the Tenant Becomes Insolvent
During voluntary administration, landlords cannot cancel the lease or enforce guarantees without Court approval, though administrators must pay ongoing rent while using the premises.
If a receiver or liquidator is appointed:
Secure the site and inventory promptly.
Notify the insolvency practitioner of any arrears.
File a proof of debt.
Be cautious about accepting late payments from an insolvent tenant — some can be clawed back as voidable transactions.
Key Takeaways
✔ Know your tenant and obtain the right security.
✔ Act quickly when defaults occur.
✔ Follow statutory notice procedures carefully.
✔ Keep clear records of all communication.
✔ Seek advice early if insolvency is on the horizon.
Turner Hopkins Commercial Team
Our property and commercial lawyers regularly assist landlords with lease drafting, enforcement, and recovery. We are here helping protect your investments and reduce risk.