Written by Jonathan Munnery, Insolvency & Restructuring Expert | Last updated: 7 April 2026 | Reading time: 4 mins
What happens if you can’t afford commercial rent or lease payments?
If you cannot afford to pay your commercial lease or rent, this may suggest that your company is out of cash and therefore, cash flow insolvent. Commercial lease and rent arrears are common red flags indicating financial distress, so it’s vital to act early. If you delay commercial rent payments or fail to seek professional insolvency advice to address the matter, the situation can quickly escalate.
Firstly, explore how you can raise funds to cover your outstanding and future commercial rent or lease payments. If you cannot raise cash to cover your commercial rent or lease, get in touch with a licensed insolvency practitioner for immediate advice.
How to approach your landlord if you can’t pay lease or rent payments
If you fall behind on your commercial rent or lease payments, your landlord can recover payments in various ways. You can avoid this by informing your landlord that you cannot afford to cover the rent or lease, opening the door to negotiations. This is in the best interests of both parties, as it keeps creditor pressure at bay and maximises the likelihood of partial or full repayment for the landlord.
By approaching the matter amicably, you may be able to continue using the property and operating your business as usual throughout the negotiations. This can protect your business from reputational harm and operational disruption. By addressing the problem with the landlord early, you can protect creditor interests which is your directorial duty.
What are your options when negotiating with landlords?
If you can’t afford to cover commercial rent or lease payments, consider your options so you can negotiate a realistic arrangement with your landlord which may include:
- Breathing space: Your landlord may give you breathing space while you get your financial affairs into order. During this time, approach a licensed insolvency practitioner to consider your options on how to raise enough funds to pay your commercial rent or lease in the immediate and long term.
- Sublet or transfer the lease – If you cannot afford to maintain your commercial rent or lease payments, you may find a commercial tenant to sublet or transfer the lease to, if your agreement allows. This can be beneficial to both parties as it relieves you of this financial commitment and minimises losses for the landlord.
- Terminate the lease – The landlord may terminate the lease due to non-payment.
- End the lease early – If it is unfeasible to continue rent or lease payments, the landlord may end the lease early, however, request for the debts to be cleared. If there’s a break clause, your lease will end early in accordance with this.
If negotiations with your landlord prove challenging and you fail to reach an agreement, seek expert advice from a licensed insolvency practitioner.
How can the landlord recover overdue rent or lease payments?
If you fail to pay your landlord and reach an agreement, your landlord can take serious action to recover overdue rent or lease payments, including:
County Court Judgment (CCJ) - The landlord can apply for a County Court Judgment (CCJ) which is when the court formally rules that you owe money and sets a repayment deadline. You can ask to make the repayment in instalments if you cannot afford the lump sum. If you fail to pay, enforcement action will begin.
Repossess property – If you fail to respond to payment reminders, the lease may be forfeited and the property repossessed.
Commercial Rent Arrears Recovery – Under Commercial Rent Arrears Recovery (CRAR) legislation, your business assets can be seized and sold to raise funds to cover your commercial rent arrears.
Winding up order - If the landlord suspects that your business is insolvent, they may issue a winding up petition. If a winding up order is granted, your company will enter compulsory liquidation, and as part of this process, creditor debts will be settled using the funds available.
How to deal with landlord arrears
If you have rent or lease arrears and cannot afford future payments, seek alternative finance to settle your debts. If your company cannot fulfil repayments, turn to a licensed insolvency practitioner for professional insolvency advice. They will advise you on the options available and how to deal with your landlord to settle outstanding rent or lease payments. We have experience in such matters and understand the complexities of commercial rent and lease agreements.
For immediate advice on dealing with landlord arrears, get in touch with the UK Liquidators team. We offer a free, confidential consultation to help you understand your financial position and explore the options available.
