Commercial Rent Arrears Recovery; how the new changes affect landlords.

Year Published: 2014

From 6 April 2014, the ancient remedy of distress whereby a bailiff could arrive at commercial premises unannounced and demand payment of rent arrears or seize goods will be no more.

Landlords can still send bailiffs to collect commercial rent arrears and remove tenants’ belongings if no payment is forthcoming however, under the new rules tenants have to be given more notice.

Commercial Rent Arrears Recovery (CRAR) is the new procedure which comes into force on 6 April 2014.

The new procedure can be summarised as follows:

  • CRAR can only be carried out by bailiffs who are certificated enforcement agents.
  • The bailiff must give the tenant seven day’s notice in writing before he takes control of the tenant’s goods.
  • If the rent arrears are still outstanding and the bailiff has to return to take control of the goods, this can be done on any day of the week between 6am and 9pm. If the tenant’s business operates outside of those hours, the bailiff can attend at a time when the business is operating.
  • CRAR can only be used to collect commercial rent arrears and cannot be used if any part of the demised premises is residential.
  • Only rent arrears can be recovered under CRAR. If service charge and insurance premiums are reserved as rent, CRAR cannot be used to recover these sums.
  • A minimum of seven day’s unpaid rent will be necessary before CRAR can be used.

How does this affect landlords?

As long as the landlord gets the timing of their notices right, it is to be hoped that the new procedure will still be a useful weapon in the landlord’s armoury when facing defaulting tenants. Tenants do however, get advance notice of bailiffs attending to remove their goods under the new rules, so it may be that the unscrupulous tenant will attempt to remove goods that may be seized.

Here at SAS Daniels we have frequent contact with bailiffs so know how they work. For more information on CRAR or any other issues relating to Commercial Rent Arrears please contact a member of our Dispute Resolution team on 0161 475 7676.

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