Commercial Property – Recoverin Rent For Landlords

From 6th April 2014, a landlord is no longer able to exercise his right of distress against a breaching tenant for the recovery rent arrears. This has been replaced by a new
statutory regime – Commercial Rent Arrears Recovery (“CRAR”) and the key aspects are:

– CRAR only applies to written leases and so the remedy will not be available to landlords seeking redress against tenants whose terms of occupation is not in writing.

-CRAR only applies to written commercial property. CRAR will not be available to landlords where the lease is of mixed-use properties, for example, where a landlord is letting out shop premises which has a flat or flats above them, to preserve their use of CRAR remedy, it is best to let the premises on different terms i.e. the shop as a commercial lease and the flats as residential lease.

-CRAR can only be used to recover Rent. Other charges such as service charges or
insurance, irrespective of whether they are reserved as rent cannot be recovered using
the CRAR remedy although it is possible to recover any VAT or Interest payable against the rent arrears.

-CRAR requires that the landlord must serve a seven clear days’ notice in writing
using the prescribed form (and excluding Sundays, Christmas Day, Good Friday and Bank Holidays) on the debtor tenant before entering the Premises to seize goods. The
CRAR remedy can only be exercised if the outstanding sums (less interest due under
the lease, VAT and any set-off a tenant is entitled to make) exceeds the minimum amount of seven days rent and the landlord cannot take control of goods which has a value that exceeds the total amount of the debt owed (together with associated costs such as enforcement and legal costs).

-Any notices served on sub-tenants to redirect rent can only be served directing the
sub-tenant to pay rent direct to the landlord to discharge will only take the immediate tenant’s rent arrears and such notice will take effect fourteen days after service. If the sub-tenant who has been served with diversion notice fails to pay the amount claimed in the notice the landlord may exercise also CRAR against the sub-tenant.

This blog has been prepared to offer our clients, actual and prospective some useful information on the options of rent recovery in the law. It is not in anyway to be read and taken as comprehensive statement of the law on this subject. For more information and advice, please contact us on 0208 943 3577 / 0778 407 5859 or by email info@jacksonlonge.com

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