A new commercial rent arrears recovery process is to be brought into law in April 2014, which will allow commercial landlords to recover “pure” rent arrears.
Commercial Rent Arrears Recovery (CRAR) was set out in Part 3 of the Tribunals, Courts and Enforcement Act, which received Royal Assent in 2007. The government has now published new regulations setting out the new statutory process, which will replace the common law right to ‘distress for rent’.
The process of distressing for rent allows landlords to use certified bailiffs to seize goods at the leased premises and then sell them at auction, deducting the arrears from the proceeds of the sale.
CRAR will only be available in respect of unpaid rent – including VAT and interest, but excluding costs such as service charges and insurance, which can currently be recovered. Landlords will also only be able to use it on wholly commercial property and will not be allowed to use it on properties where any part of it is legally used for residential purposes.
Among the other conditions of the statutory process will be an obligation on the landlord to serve a ‘notice of enforcement’ on their tenants. This period was reduced from 14 to seven days, after landlords voiced concerns that the time period would allow tenants to remove anything of significant value from the premises.
The amount in arrears will also have to be in excess of a certain, as-yet unspecified amount, and the tenant will have to have been in arrears for a minimum of seven days, up from the current minimum of just one day.
The government has pledged to provide further detail and clarity on the specifics of CRAR prior to it taking effect next spring.