The ancient remedy of distress, which enables a landlord to enter leased premises without notice, seize a tenant’s goods and sell them to recover arrears of rent, will be replaced on 6 April 2014 by a new statutory procedure known as Commercial Rent Arrears Recovery (CRAR).
This is seen as a less effective remedy from the landlord’s perspective as CRAR is not available if any part of the property is residential and it can only be used to recover “true” rent, meaning the amount payable for use of the premises. CRAR cannot be used to recover payments by the tenant to the landlord in respect of business rates, services, repairs, maintenance, insurance or other payments often called “rent” in the lease.
As a result CRAR may be difficult where the rent is an inclusive sum as the landlord will have to decide what portion of the total sum reasonably reflects the amount payable for the use of the premises. Furthermore, the landlord must give seven clear days’ notice in writing before entering premises to seize goods, with the obvious risk that the tenant will use that period to remove items of value. Another change is that notices which may be served by the landlord on sub-tenants to redirect rent to the landlord will only take effect fourteen days after service.
See our briefing on Commercial Rent Arrears Recovery for more information or get in touch with your usual contact in our Real Estate or Real Estate Disputes teams.