Landlords of Commercial Premises - Update

On 6 April 2014 the Commercial Rent Arrears Recovery (“CRAR”) was introduced which replaces the remedy of distress to recover rent arrears. The CRAR is governed by the Tribunals Courts and Enforcement Act 2007.

There are specific requirements in relation to the CRAR which landlords should bear in mind as some of these differ to the old remedy of distress which has now been abolished, namely :-

• The CRAR applies only to leases of commercial premises so if the premises is being used as a dwelling or any part of it is let or underlet as a dwelling, the Landlord will be unable to rely on CRAR.

• The lease must be in writing.

• You can only rely on CRAR to recover principal rent, interest and VAT (rent does not include any sum in respect of rates, council tax, services, repairs, maintenance, insurance or other ancilliary matters even if these amounts are reserved as  rent in the lease)

• The procedure for enforcement by taking control of goods is dealt with under Schedule 12 of the Tribunals Courts and Enforcement Act 2007 and can only be exercised by an Enforcement Agent

• The tenant must be provided with 7 clear days notice of enforcement prior to exercise

• There are restrictions on what goods can be taken. The enforcement agent cannot take control of exempt goods which are specified as: 

• Items of equipment which are necessary for the tenant's personal use in the tenant's employment, business, trade, profession, study or education. This includes computer equipment and vehicles. This exemption only applies where the aggregate value of the items is up to £1,350. Items valued over this threshold may be seized.
• Clothing, bedding, furniture, household equipment, items and provisions that the tenant reasonably requires to satisfy its basic domestic needs and those of the tenant's household (this will apply in the limited circumstances the enforcement agent can enter mixed use premises
• Assistance dogs, sheep dogs, guard dogs or domestic pets.
• A vehicle with a valid disabled person's badge.
• A vehicle which is being used for a disabled person, or which there are reasonable grounds for believing is used for, police, fire or ambulance purposes.
• A vehicle displaying a valid British Medical Association badge or other health emergency badge because it is being used for, or there are reasonable grounds for believing it is used for, health emergency purposes.

The above information is a brief overview of the new regime in relation to recovery of commercial rent arrears.  If you have any queries surrounding this topic or any others please do not hesitate to contact us on 01978 291000 for Wrexham, 01244 312166 for Chester or 01492 641222 for Llanrwst.