As from 6th April 2014 commercial landlords are no longer able to levy ‘distress’. In other words, without notice, they are unable to use bailiffs to collect rent arrears from their tenants, by “turning up” and removing goods to the value of the outstanding rent.
A new procedure has been introduced to replace ‘distress’, Commercial Rent Arrears Recovery (CRAR), and it differs from the ‘old common law’ method in the following ways:
CRAR can only be used when the tenant occupies the premises under the terms of a written lease.
It can only be used to recover rent – not service charge or insurance.
Rent must be outstanding for a minimum of seven days before CRAR can be used;
It only applies to premises that are commercial.
The landlord must give seven days notice of their intention to levy enforcement. This must be in writing and has to contain certain, prescribed information.
CRAR can only be used between 6:00 and 21:00 – any day of the week or during the tenant’s business hours (if they fall outside of these times).
Seven days notice must be given to the tenant of the landlord’s intention to sell any goods taken and they must be sold at a public auction.
On the face of it, it would appear that the introduction of CRAR has made the process of recovering rent arrears far more cumbersome for the commercial landlord and, undoubtedly, more expensive. On the flip side, commercial tenants are in a much stronger position given the amount of notice they will now have for any recovery action.