“CRAR” to replace distress for rent in April

The abolition of the landlord’s ancient remedy of distress, and its replacement with Commercial Rent Arrears Recovery, has been on the cards for some time. The Government has published new regulations due to come into force in April 2014 and we now have a much clearer idea of what the new regime will look like.

Distress for rent is an ancient common law remedy. It permits a landlord to recover unpaid rent by seizing property on the tenant’s leased premises and selling it to pay off the arrears.

The remedy will be abolished from April 2014 and replaced by a statutory procedure called Commercial Rent Arrears Recovery (CRAR).

There are a number of crucial changes which will affect landlords.

  • CRAR is only available for commercial premises. If any part of the premises is residential, then the statutory procedure cannot be relied on.
  • CRAR is not available unless the lease is in writing.
  • It can only be used for unpaid rent. Other sums due under a lease, such as service charge, cannot be recovered using the procedure, even if expressly reserved as rent. In addition, at least 7 days’ rent must be owing before the procedure can be used.
  • There are new notice requirements. Landlords need to give tenants at least 7 days’ notice of the intention to use CRAR and then a further 7 days’ notice of the proposed sale of the seized goods. Tenants may use the notice period to remove goods at risk of seizure. 
  • Only certificated bailiffs are empowered to exercise the remedy. 
  • Finally, the landlord still has the option of serving a notice on any sub-tenants requiring them to pay their rent direct to the head landlord, but such a notice will only take effect 14 days after service.

Due to the potential difficulties involved in relying on the new regime, landlords in future may wish to make more use of tenant deposits (covering both rent and payments such as service charge) or to insist that the tenant provides a guarantor.

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