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Commercial Rent Arrears Recovery – Post April 2014
April 2014 will see material changes in the way that landlords can recover rent arrears from tenants on commercial leases. These changes will have a drastic affect on the approach that commercial landlords must adopt in order to maximise the prospects of any recovery following a tenant’s default in payments due under the Lease.
The new Commercial Rent Arrears Recovery (CRAR) proposals indicate major changes to the ancient self help remedy of distress and are likely to impose significant obligations on landlords – predominantly that:
• Recovery will only be available to tenancies evidenced in writing
• Any mixed use/residential element to the tenancy/lease will rule out any prospect of recovery under CRAR.
• The amount that can be recovered under CRAR is limited to the basic rent or ‘pure rent’ and as such does not include any entitlement to recover any arrears relating to rates, council tax, services charges, repairs or insurance – even if these amounts are described as rent in the lease.
• The unpaid rent must become due and payable before the ‘notice of enforcement’ can be served on the tenant
• A ‘notice of enforcement’ must now be served on the tenant with a clear 7 days elapsing before the bailiffs can be sent to the premises.
• Only an ‘enforcement agent’ authorising in writing by the landlord can seize the tenants goods
We have developed a CRAR Debt Recovery solution that streamlines all these practical difficulties into an easy to manage and informative process. In addition to the service helping you recover basic rent from your tenant, you will be able to benefit from our expertise in conventional Debt Recovery to pursue any ancillary arrears that you would otherwise be precluded from recovering under CRAR (e.g. rates, council tax, services charges, repairs or insurance).
Since the ancient self help remedy of distress was seen as draconian in nature, the purpose of the legislation is to tip the balance of power away from landlords. However, thanks to our CRAR Debt Recovery Solution, the legislative changes do not mean that a landlord is rendered toothless in his or her pursuit of arrears!
For further information about the changes, or for our CRAR Recovery Proposal, please email our Head of Business Services: Maria Koureas-Jones on firstname.lastname@example.org.