Rent recovery to be transformed under new rules

Commercial landlords must be aware of changes to the law which will transform the way they collect outstanding rent, an expert has warned.

David Bailey, commercial property litigation partner at Napthens solicitors, warns that from April 6 this year a new set of rules – Commercial Rent Arrears Recovery (CRAR) – will replace the former common law right to ‘distress’ for rent.

The process of ‘distraining’ for rent allows landlords to instruct certificated bailiffs to pursue tenants for outstanding rent, and to seize goods and remove them for sale if payment is not made within a short period. This can put a landlord ahead of other creditors.

The new law is to be introduced to address concerns by many in the industry that the system is weighted in favour of landlords. Whilst CRAR doesn’t take away a landlord’s right to seize goods for non-payment of rent, the rules are much narrower.

David has highlighted what he believes are the most important changes.

He said: “Previously the element of surprise was a big weapon in a bailiff’s armoury. Under the new rules, a minimum of seven days notice – in writing – must be given before landlords can use the new CRAR process. This is a major change, and there is a concern that debtors will simply move property that could be seized.

“It may also allow time for a tenant to begin an insolvency process, which will generally put a stop to enforcement action for non-payment of rent.

“Distraint is available not just for rent but other sums reserved as rent in a lease, e.g. the service charge and a contribution to the cost of the landlord’s insurance. However, under CRAR only ‘pure’ rent is recoverable. “This is a very important and complex area of the law, and commercial landlords must understand their responsibilities and rights in order to operate within the law.”