Recognising tenant or guarantor insolvency is crucial in mitigating financial risks. Early detection allows landlords to plan for potential vacancies, secure alternative tenants, and manage cash flow. Proactive measures can safeguard property values, maintain occupancy rates, and ensure sustainable investment returns.
There are various signs to look out for to pre-empt insolvency.
- Late payment of rent
- Request for rent concessions
- Tenant failing to comply with rent concessions
- Poor communication with landlord or its agents
- Inability to track down guarantor/unresponsive guarantor
- Tenant seeks a payment plan that is over and above the 'usual' monthly payments
- Requests to assign/sublet shortly after: (a) grant new lease or (b) assignment existing lease
- Third parties contacting landlord. Rent settled by parties unconnected to the tenant or any guarantor
- Failure by tenant to 'top up' any rent deposit following landlord withdrawal
- Delays tenant filing statutory accounts at Companies House
- Series of poor trading figures (check the filed accounts at Companies House for "at risk" tenants)
- Becoming aware of a possible company voluntary arrangement (CVA)
- Negative press coverage
- Management instability and redundancies
- Gazette Data Service/Red Flag alert
Remaining attentive to these indicators empowers landlords to forestall potential insolvency risks effectively.
