Commercial Rent Arrears Recovery Regulations 2014 (CRAR)
From 6 April 2014, CRAR replaced the ‘distress for rent’ remedy that enabled a landlord to enter leased premises without notice in order to seize a tenant’s goods and sell them to recover arrears of rent. The basic procedure for CRAR is set out in the Tribunals, Courts and Enforcement Act 2007 and the Taking Control of Goods Regulations 2013, which the Government introduced at the end of July 2013. The Regulations confirm that CRAR will provide a considerably more limited remedy to landlords than the current rules on distress for rent.
Key points to note with regards to CRAR:
CRAR is only available to landlords of written leases of commercial premises. Landlords with shop premises with flats above within the same lease should consider letting such premises on separate residential and commercial leases in order to reserve the CRAR remedy for the commercial lease.
CRAR can only be exercised if the outstanding sums (minus the interest due under the lease, VAT and any set-off a tenant is entitled to make) exceed the minimum amount of seven days’ rent.
CRAR can only be used to recover rent, VAT and interest. Other sums such as service charges or insurance cannot be recovered and where a rental figure is inclusive of such sums, only the proportion reasonably attributable to the possession and use of the premises is recoverable.
Before CRAR is exercised seven clear days’ notice of enforcement must be given. The Court has the ability to reduce the notice period if it is likely the goods will be moved to avoid being taken.
The seizure of items belonging to the debtor must be undertaken by a certified enforcement agent, and goods which the debtor requires for personal use or in connection with employment, business, trade, profession, study or education are exempt up to an aggregate value of £1,350.
There are various considerations the landlord would need to take before exercising the remedies available under CRAR.