Distress is a remedy available to landlords. Where a tenant is in arrears of rent, the landlord may instruct a bailiff to the enter the property and seize the tenant’s goods.
On 6 April 2014 this will all change because of the new statutory regime for Commercial Rent Arrears Recovery (CRAR).
Why is this important?
- It will make recovery of rent arrears more difficult for landlords and restrict their ability to seize goods
- It will provide a standard procedure and give tenant’s greater comfort and protection.
Will it always be available as a remedy?
No – it will only be available where:
- There is a written tenancy of commercial premises
- There are 7 days arrears of rent
- The rent arrears relate solely to the basic rent, any VAT and interest payable on top of that. As such, even if service charge and insurance rent are reserved they will not be recoverable under CRAR.
- At least 7 days (not including Sundays and bank holidays) clear notice is needed before enforcement and the landlord needs to serve an enforcement notice.
- In some circumstances the court may reduce the notice period it would do this where, by not doing so, the goods that the landlord might claim would be removed by the tenant
- On expiry of the enforcement notice the landlord’s enforcement agent can then enter the property and recover the goods belonging to the tenant.
- Entry to the property must be between 6am and 9pm on any day of the week. In circumstances where the business does not operate during these hours then the agent may enter when the business is open
- The agent needs to wait 7 days and also give the debtor 7 clear days before selling the goods. The only way round this would be where waiting caused the goods to become unsalable
- Goods central to the tenant’s personal use or in connection with employment, trade, business, study or profession are exempt up to the value of £1,350.
In the past distress has been a useful tool for landlords to recover rent arrears and these changes won’t be welcomed. As for tenants, this will be a welcome development and provides them with notice to deal with matters. The optimistic amongst you might agree that notice of enforcement might be enough to encourage many tenants to settle their arrears before enforcement becomes necessary.
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