Commercial landlords – time is ticking

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Commercial landlords – time is ticking

28 Nov 2013

As from 6th April 2014 landlords will no longer be able to use the ancient common law remedy of distraint i.e. sending in the bailiffs for unpaid rent.

The new process which will come into effect is the CRAR (commercial rent arrears recovery process).  The process will involve giving notice to the tenant, something which a landlord does not have to do at present.

A landlord will only be able to use this process where they are owed pure rent i.e. the principal rent and VAT on the rent if it is payable plus interest.

What is not covered under the CRAR

Landlords will not be able to claim for items which are not pure rent such as service charge, rates, council tax, insurance premiums, repairs and maintenance even if they are defined as rent in the lease.

Claim for unpaid rent on mixed use premises, for example a shop and a flat, will not be covered under the CRAR, and landlords will not be able to take control of goods which belong to third parties when they distrain.

Additionally, a landlord will not be able to use CRAR where the lease is not in writing or is a licence to occupy.

Time to use distraint is running out

The important point for landlords to take into account is that if you are owed rent (however it is defined in your lease) it would be sensible to use the remedy of distraint (provided it is appropriate) before 6th April and you should always obtain legal advice on using distraint as a remedy..

If you are paid rent on the usual quarter days then you will be able to use CRAR up to the December and March quarter days of 2013 and 2014 respectively (25th December and 25th March).  If you are paid weekly or monthly then you will have a number of other opportunities before 6 April 2014.

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